My parents have an ipad2 and I've got a 4S. I facetime them every weekend and it works fine. Obviously the picture isn't 1080p but it's plenty good enough (we're both on about 5-7meg wifi). One small tip I only found out the other day, you can drag the 'picture in picture' round the screen so it doesn't get in the way of someone you're talking to.
You need a minimum of 100 - 150 kbps each way for FaceTime, and around 250 kbps each way for good picture and sound quality, so not much bandwidth at all. Obviously the more bandwidth available the better quality the video and audio will be.
HD FaceTime on a Mac needs a minimum of 1 Mbps each way.