updated 05:50 pm EDT, Wed March 23, 2011
Unclear if problem is app or iOS issue
Numerous reports have been appearing on Apple's support forums and other places that FaceTime is affected by a bug that causes the program to freeze, particularly when trying to switch between front and back cameras. Users are left with a still image on both ends of the call. It's unclear at the moment whether this is strictly a bug in the iPad 2 version of FaceTime or a systemic iOS issue.
Reports of the problem have even come from Apple retail store managers, indicating that the problem may be widespread. A simple reboot (powering down and restarting, or forcing a reset by holding the home and sleep buttons for a short period) seems to fix the issue for most users, albeit temporarily. Some have reported the same issue with the iPhone 4, but these reports are less common.
Apple is expected to release iOS 4.3.1 within the next two weeks, which may address the issue (along with a few others, such as the gyroscope in the iPad 2 not always being detected).