According to sources close to the situation, Index Ventures and Michelangelo Volpi are out of the deal to buy Skype–and their lawsuit-loving nemeses, the founders of the Internet telephony service, are in.

Skype founders Niklas Zennström and Janus Friis had sued Index and partner Michelangelo Volpi via tech companies they control, Joltid and Joost.

The pair had already been in a legal battle over software licensing issues with eBay (EBAY), the company that had sold Skype to in 2005.

They then accused Index and Volpi, employing a reputation-bashing style, of using confidential information as part of a consortium bid to acquire a large chunk of Skype.

Volpi had been Joost’s CEO.

Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Ironically, Index was only a small part of the group that won the deal to acquire Skype from eBay recently.

News of the serious settlement talks was reported earlier this week by GigaOm’s Om Malik.

The New York Times’s Brad Stone also added significantly to the story about the settlement today, noting the Skype founders would be getting a stake and that Index “is most likely withdrawing from the deal.”

Well, most likely now means certainly for Index, sources told me, and the London-based venture firm that bid for Skype has to bid that deal goodbye.

More details to come, but it’s sure proof that the legal system, such as it was used, works.

Yesterday, several Flickr engineers posted news of their layoffs from the Yahoo photo-sharing unit on Twitter, which caused GigaOm’s Om Malik to notice that Flickr architect Cal Henderson (pictured here) was also no longer on its About page.

According to several sources I spoke to, Henderson was actually not laid off at Yahoo (YHOO), but is leaving to start a new company–in the social-gaming arena, I am told–with Flickr co-founder Stewart Butterfield.

He and several other of the original core development team for Flickr transitioned out or have been transitioning out for quite some time, sources said.

Henderson’s Web site, called iamcal.com, still says he is the head of engineering at Flickr.

Butterfield (pictured here), as well as another co-founder, Caterina Fake, left Yahoo last year. Yahoo had paid $35 million to acquire Flickr in 2005.

Fake joined another start-up, called Hunch, last summer as chief product officer. Hunch is an answers site and is now in beta testing.

Is it just me or does the sudden prospect of venture capitalists–the very investors who fueled the Web 2.0 valuation insanity with their typically egregious overfunding of start-ups–lecturing about the bleak economy and the need to tighten belts seem just a tad ironic?

It’s kind of like Washington politicians who handed out-of-control bankers one deregulation after another in exchange for campaign donations now mounting their high horses and decrying Wall Street greed in the current economic meltdown.

And yet, just like that, Silicon Valley’s investors–who could spin you all the way to next Sunday about how Facebook was actually worth $15 billion, despite not having much revenue quite yet–are turning into penny-pinching accountant types.

As reported by Om Malik of GigaOm in a piece titled “Sequoia Rings the Alarm Bell: Silicon Valley Is in Trouble,” for example, Sequoia Capital–one of tech’s most powerful and successful VC firms–held a meeting where it told its portfolio companies that the downturn was quite serious and advised them to start cutting costs.

Apparently, there was even a picture of a gravestone with “R.I.P.: Good Times” displayed at the gathering, in case the start-ups did not get the sledgehammer message. (And here is an update on the meeting by Malik.)

The last time Sequoia did this was when the Web 1.0 bubble was popping in 2000.

The same communication was also sent out to entrepreneurs by angel investor Ron Conway then, and now yesterday again.

The typically jovial Conway (pictured here) sent out a grim email to the start-ups he is invested in, advising they lower their burn rate to get ready for the tough times ahead.

Wrote Conway: “Unfortunately history DOES repeat itself but I hope we can learn from history and prevent the turmoil from occurring again. The message is simple. Raising capital will be much more difficult now … the name of the game in this environment in some respects is survival–survival until conditions change.”

Now he tells us!

In all seriousness, these kinds of prescriptions should have been front and center when times were presumably good, especially after the first orgy of Internet frothiness ended with such a thud.

Instead, the all-trees-grow-to-heaven attitude, the massively inappropriate valuations, the revenue-what-revenue strategies have been pushed on entrepreneurs in this cycle by too many VCs, most of whom should have known better.

And, while it is right for Sequoia and Conway to sound the alarm, I expect all the VCs who touted loudly will now climb aboard this somber bandwagon.

Because, after handing over too much money to start-ups like drunken sailors on shore leave, it is apparently now Sunday morning and time for a little salvation.

But not completely, of course, since this is still an industry where the dreams of hitting it big never die.

After I jokingly called Conway “Oh voice of doom and gloom” after reading his email, he quickly wrote back: “NO WAY DOOM AND GLOOM. I think innovation in the Valley will continue to thrive and I will continue to invest.”

Of course, Conway will. It wouldn’t be Silicon Valley if he didn’t.

And to raise your spirits from these wet-blanket VCs, here’s a video of Mike Settle singing the classic “What Shall We Do With the Drunken Sailor”:

Someone get a dose of Ritalin stat to the noisy but deeply misguided critics who took news of the huge number of downloads of apps for the Apple (AAPL) iPhone and immediately concluded it was just not good enough.

Thus, as reported today in The Wall Street Journal, 60 million downloads in 30 days–mostly for free apps, but with about $30 million in revenue, and a runway of three million more new iPhones out there too–is a chance to talk about how it all is just so unexciting and how the apps market is officially saturated?

Am I missing something here? One would assume that were these pundits pioneers, they would get to Ohio and declare that the going farther west held very little promise, thank you very much!

Wrote TechCrunch’s Erick Schonfeld:

The question is how many apps can one person really manage before becoming overwhelmed. While the initial impulse is to download as many apps as possible to try them out, there is a limit to how many apps you can juggle on your iPhone. It is not much different than a PC. You have tons of apps, but how many do you actually use on a regular basis? For most people, that number is probably no more than ten apps, and on a daily basis, maybe three or four, tops.”

Yes, that personal computer thing has been such a disappointment for us all and a real failure in spurring the creation of a plethora of multi-billion-dollar software makers, hasn’t it?

In actuality, while there is obviously going to be an initial period of frantic trying-out of apps and a fall-off of regular usage, the entire point is that a useful and important platform is being developed here.

Stlll, GigaOm’s Om Malik talked to new iPhone analytics company Pinch Media and managed to find lemons in the lemonade:

Using the caveat that only a few app makers were using the Pinch Analytics library, [Pinch's Founder Greg Yardley] pointed out that as per their data, the ratio of free downloads to paid downloads is at least 10 to 1. He also said that the pace of downloads is slowing, which is expected because the early rush is behind us. According to data collected by Pinch Media, on average, less than 20 percent of an application’s overall unique users return to an application each day. Yardley also pointed out that people are using the apps for just under five minutes at a time, on average. The majority only use the applications once per day; the average number of uses per day is around 1.2.

Looks like I am not the only one who is getting bored with some of the more blah apps. Phew!”

Of course, Malik and others will not like each and every app, but that is not exactly a surprise; nor should it be the focus.

As Apple CEO Steve Jobs correctly noted to The Journal:

“Phone differentiation used to be about radios and antennas and things like that. We think, going forward, the phone of the future will be differentiated by software.”

Exactly. This is less about the iPhone, than it is about all mobile phones, going forward.

But, because of the iPhone’s trailblazing, they will be easier to use, because of apps and multi-touch and a much richer multimedia experience.

That market will thus require a lot of apps, some of which will work and some of which will flop.

As I wrote about the popularity of the third-party apps and Apple’s iTunes App Store:

That’s because Apple has built a platform for adults.

Like many, I have downloaded dozens of iPhone third-party apps over the last several days.

And, unlike what one can discover on the other hot apps platform–namely Facebook–they are uniformly superb, lovely, useful and fun in a really nonjuvenile way. …

I think you would not say so after looking over a lot of what is available at the App Store on iTunes.

Lots and lots of the apps there are games, of course, which are the most popular.

But what amazingly clever games, like MotionX Poker with the delightful rolling dice, or the humming swish of PhoneSaber (totally silly, but in a profound manner that Vampire-biting on Facebook will never achieve).

And the list of useful stuff–Pandora Radio, Starmap, WeatherBug, Evernote and WHERE–is long and growing longer, and these seem to enjoy as much prominence and popularity as the sillier stuff.

In addition, the ability to truly use other Web services in a mobile setting–from Photobucket to Yelp to AIM to the New York Times–makes the iPhone an even more useful device to me.

And for each of the apps I can also imagine various monetization schemes that now make a lot more sense since the iPhone platform enhances them with mobility and simplicity.”

Or, as the cliché goes: “The Plains are covered with the bodies of pioneers.”

But some of them, of course, made it to California.

The rest, as they also say, is history.

Speaking of which, here is a video of AllThingsD.com’s Co-Executive Editor Walt Mossberg discussing the iPhone’s significance at the Aspen Ideas Festival in July, in a short snippet from his talk there:

In BoomTown’s ongoing quest to overdose on tech conferences, I traveled south of San Francisco last night for Fortune magazine’s Brainstorm: TECH conference.

Run by David Kirkpatrick, it’s well done and a great place to run into a range of techies from Silicon Valley, as well as talk to more creative thinkers on where tech is going.

I was there to be on a dinner panel with fellow bloggers Om Malik of GigaOm and my favorite geek to tease, Robert Scoble, of Scobleizer. Fortune’s Adam Lashinsky moderated.

It was an interesting panel about a range of topics, from Yahoo (YHOO)–Kevin Kelly was bored, bored, bored with that topic–to the looming economic pressure that the digital industry is about to experience (a bummer, but entirely true).

Here’s the video:

With all the Yahoo (YHOO) reorganization noise this past week–full of sound and fury, signifying nothing, if you want to go all literary!–BoomTown had little time to post our video on GigaOm’s Om Malik’s Structure 08 conference on Wednesday.

Held at the spanking new Mission Bay Conference Center in San Francisco, it was high-wonk, packed with CTOs and those involved in building the guts of the Internet and its infrastructure, whose jobs are becoming more complicated than ever as Internet usage booms.

Malik thinks this unprecedented growth is putting a lot of stress on the system, akin to the physical wear-and-tear our nation’s roads and bridges are under.

As he wrote: “The platforms on which we have done business for over a decade are starting to provide diminishing returns; the smart money, meanwhile, is seeking new platform structures.”

Thus, lots of talk about how to manage the potential crisis, such as the move toward cloud computing, databases in the sky and other stuff that is way, way over BoomTown’s head.

Nonetheless, we press on, because it is our solemn duty to understand dark fiber someday soon.

Here’s the video, including interviews with Malik, WordPress’s Raanan Bar-Cohen and NetSuite CEO Zach Nelson:

Tonight, The Wall Street Journal and Reuters had nearly identical stories, noting that Microsoft (MSFT) was interested in buying Yahoo’s (YHOO) search business, which–oh, we bloggers get so touchy when we don’t get even a smidgen of credit, don’t we?–BoomTown speculated was just what the software giant was interested in yesterday.

Wrote BoomTown on Sunday afternoon:

Will Microsoft now just buy Yahoo’s search business instead of the whole company?…The software giant would not give details, but sources at both companies speculated to BoomTown that it involved Microsoft buying Yahoo’s search business and the ad business related to text-based ads, or doing another kind of transaction that would bring the companies closer together to fight Google (GOOG)… Indeed, given that Microsoft, in its long-running war with archrival Google, it wants most of all to grab Yahoo’s search ad business to become a credible No. 2 in the important sector. It could do this via a purchase of those assets or, said others, formulate a deal to be Yahoo’s exclusive search partner.”

And wrote Reuters tonight:

Microsoft Corp. has proposed to buy Yahoo Inc.’s search business and take a minority stake in the Web pioneer, stopping short of a full-out merger, a person familiar with the discussions said on Monday… The new deal, if completed, would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc., whose ubiquitous search engine has made it an online advertising powerhouse.”

Said The Journal in its new report, after focusing on a simpler Microsoft-Yahoo outsourcing deal Sunday, also tonight:

Microsoft Corp.’s proposed alternative to acquiring Yahoo Inc. would involve a break-up of the Internet giant that people close to Yahoo said is unlikely to win favor with its board. In recent days, Microsoft floated a proposal to acquire Yahoo’s search-advertising business, said people familiar with the matter… Microsoft’s proposal didn’t offer much detail on how it would structure a search-ad deal, the people said. But the plan would likely involve Microsoft’s selling the ads that appear alongside Web-search results delivered to Yahoo users; that could help it gain on Google, the search-ad-market leader.

To be fair, both Reuters’ and The Journal’s reports make such a plan by Microsoft even more definitive and have interesting new details, which are intriguing.

They include:

Both take note of Microsoft’s proposed sale of Yahoo’s Asian assets (worth close to $10 billion, according to the same analyst cited by both reports, who also puts a $21 billion value on Yahoo’s search ad business).

Reuters underscores that billionaire investor Carl Icahn is not pleased with the idea of a partial sale of Yahoo to Microsoft and might side with a Google outsourcing deal, if that came to pass.

And The Journal stressed that Yahoo’s board, which thinks it is all a Microsoft ploy to scotch a possible search-ad outsourcing deal with Google, was also unimpressed with Microsoft’s ideas.

More new news too from Om Malik at GigaOm, who gets hold of yet another Microsoft exec’s memo to the troops.

Yesterday, it was a “leaked” memo from Kevin Johnson, president of Microsoft’s Platforms & Services division.

Today, one from Satya Nadella, its VP of Search. In the memo, Nadella outlines some minor management re-orging, but mostly talks somewhat opaquely about where search is going (no wonder Microsofties are confused as to what direction to take!).

Money quote:

One of the clear themes that emerged from my discussions was the need to build depth of expertise and focus on both the media and technology side and connect the two via common purpose and vision. The other major theme was to create an organization that wherever possible helped drive global and cross network capability, while always enabling and empowering the local aspects of our media business. Lastly it’s imperative that we set up for blurring of the lines between Portal and Search to drive experiences that enable more seamless exploration of content across the search-browse continuum. We want the combined expertise of the team to drive this innovation and also create more scale with vertical efforts.”

A free lunch at AllThingsD.com HQ–come to my house, walk through the kitchen to the cottage in the back–for anyone who can explain this in easy-to-understand words to BoomTown!

Added challenge: Nadella can enter the contest too!

And, finally, don’t miss this report by TechCrunch about former Yahoo Chairman and CEO Terry Semel’s appearance at a conference in Israel on a stellar panel with Google’s Sergey Brin, Yahoo’s current President Sue Decker, News Corp. (NWS) head Rupert Murdoch and well-known Israeli entrepreneur Yossi Vardi.

All I can say is ouch at some of the translated highlights.

“Ouch,” said Richtel about the reaction to the piece.

After its appearance in the Times, Richtel (pictured here) got flamed all over the Web by bloggers and mainstream media types alike.

His offense? Using two recent blogger deaths and a heart attack of another blogger, Om Malik (also at our dinner), as the whisper-thin thread he hung his story on.

Actually, Richtel did have a lot of caveats in the piece, whose first problem was probably its very inflammatory title, “In Web World of 24/7 Stress, Writers Blog Till They Drop,” along with an admittedly purplish lede:

“They work long hours, often to exhaustion. Many are paid by the piece–not garments, but blog posts. This is the digital-era sweatshop. You may know it by a different name: home.”

Well, I, for one, am pretty exhausted since I started blogging almost a year ago. But I am blaming that on my two sons, aged 3 and 6, whose perpetual-motion-machine energy is hard to keep up with at my advanced age.

A trend! Old-lady mothers of small boys who blog, attend a never-ending Little League game and never sleep! Get on it, Matt (who will know this cycle well soon enough–congrats)!

In any case, I think you pretty much have to give big mainstream media companies a semi-annual pass on three-examples-is-a-trend stories they so love.

And, at the very least, Richtel’s piece did result in some funny videos.

Like this one from BarelyPolitical.com (best known for foisting Obama Girl on the world), a comic investigative piece on blogger sweatshops:

For those heading into the weekend, don’t miss this post from tech blogger Om Malik (pictured here, but the cigar is now a thing of the past), assessing his life and work three months after he suffered a serious heart attack.

Titled “Off Topic: What the Past Three Months Have Taught Me,” it is actually quite on topic for anyone who works a bit too hard and is a bit too connected (that would be everyone reading this right now).

While Malik has changed the obvious things–no more smoking, less meat-eating and adding exercise into his daily life–he notes that it is more the “little things that have proved to be a challenge.”

Because he is a true geek, Malik reaches for tech metaphors when trying to describe the state of his new being, comparing himself to a MacBook Air.

Not the sleek and thin part, but because “the Macbook Air comes with [a] minuscule amount of storage space, so one needs to be careful about how to use it. The machine’s battery power limitations remind me of how much time I have to devote to work on a daily basis.”

Thus, gone from Malik’s hard drive: excessive public appearances, too much travel and too many RSS feeds.

In addition, he realized something my grandmother always used to tell me: There are no indispensable people. Even if your blog is called GigaOm.

Through his experience, Malik said he learned to rely on his team more and stopped micromanaging. “You empower people, and in turn they power you to do good things,” he wrote.

And perhaps most important of all for those who live in the pressure cooker of Silicon Valley: Get a cardiac heart check-up now.

I spent some time with Lilly at a conference in Hawaii last year (I know, boondoggle!) on a scavenger hunt team and can attest to the fact that he is as smart as he seems here in this video about the future of the open-source browser company.

Malik, who will not be smoking cigars any longer as he is pictured here, is newly out of the hospital and in rest-and-recovery mode.

While not ready to subject himself to the withering annoyance of BoomTown’s video–and don’t think I did not ask!–I can report that Malik looked quite spry and as relaxed as one can be, given the circumstances.

Everyone at AllThingsD.com wishes him well and looks forward to his quick and successful recuperation.

Perhaps the only blogger who would have had the exact right take on this somewhat silly Scobleicious day of data portability debates is Om Malik.

Unfortunately for us and mostly for him, he has been sidelined by a sudden heart attack he suffered over the holidays that landed him in the hospital (in fact, Om actually walked himself there, so that is a good sign). According to a blog post he made earlier in the day, that’s where he has been camped out now as he recovers and contemplates a life without fried foods and stress.

The latter might be a little hard for Om, who is probably the hardest-working man in the tech-blog business and on whom I egregiously patterned my own journey into the online-content medium.

Of course, I did, given that Om combines dogged reporting with analytical savvy and typically exacting standards he gleaned from a life in mainstream journalism. He is also a genuine character with an important definitive voice.

We all looked at Om as a real trailblazer when he struck out from the relative safety of a traditional magazine job to move into a still-nascent Internet space, a journey that continues to this day with his interesting expansion of the GigaOm brand into all sorts of related digital arenas like the excellent NewTeeVee and Earth2Tech.

Of course, Om is still the big show and he scooped everyone with the news about his illness in the typical pugnacious but sweet-natured style that I really admire.

“With the support of my family and my team, I am on the road to a full recovery. I am going to be OK,” he wrote. “Now living a healthier life isn’t just one of my New Year’s resolutions, it’s doctor’s orders. Friends and family have purged my apartment of smokes, scotch and all my favorite fatty foods–I am even going to be drinking decaf. I won’t be refashioning my avatar’s stogie with a celery stick, but I will be taking better care of my health.”

While I am glad the cigar is still there–unlit, Om, or else you have me to answer to and you know who will win that fight–please take care and get better soon. The tech Web is a lot less interesting without you.

They include a stop at angel investor Ron Conway’s Pacific Heights (San Francisco) apartment, where we talked to Ron, entertainer and entrepreneur MC Hammer, blogger Om Malik and The Wall Street Journal’s Kevin Delaney.

Then, a visit to investor Ram Shriram’s home in Woodside, Calif., where VC James Joaquin and YouTube’s Chad Hurley are harangued by our Flip camera.

And also, a sojourn at the downtown San Francisco abode of Google’s Marissa Mayer, where we interfaced with her, as well as Google’s Sergey Brin, WSJ’s Rob Guth and, yes, someone we can only call Hot Santa.

No surprise, but BoomTown just could not resist that one.

Here’s the video:

Please see this disclosure related to me and Google.