I currently have a Adelphia broadband connection here in California
(512k upload, 4Mbit download) and use a 640*480 resolution Veo Mobile
Connect Webcam (30 frames/sec).  I simultaneously use MSN Messenger
6.2 for the video share and Skype for the audio call (Skype seems to
be more reliable than MSN Messenger for the pure audio, but does not
yet seem to support video unfortunately).

This does not produce very good quality video conference calls.    The
picture is poor quality, often whites out and does not cope with
movement at all.

My question is designed to get a personal recommendation from a
researcher for a new state-of-the-art video conferencing web camera
that will perform better.  I need one that is:
- fairly small and portable for use on the road
- connects to USB 2.0 (and no separate power source if possible)
- attaches to the top of my laptop lid
- is available worldwide so that my international business contacts
can purchase the same model locally in Europe say.
- I am happy to spend rather more than you would on the basic webcams
you see in most computer stores, if that would help (and still be
compact enough for traveling).

+ any other recommendations to improve my video conferencing?

I would suggest looking into the AXIS brand of video products. Will
certainly fit all your requirements aside from the "attaches to the
top of my laptop lid" one.

You could also do a lot worse than look into upgrading the upload part
of your broadband connection - as this is the direction your webcam
traffic will be going. Ideally you'd need a decent quality webcam
coupled with at least double the upload bandwidth you current have, so
SDSL would probably be necessary.

I have used Intel webcams for years. My 4-year-old Intel CS330 will
capture 640x480 @ 30 fps with perfect motion tracking. It has
saturated every internet connection i've had. I'm currently 4 mbps
down 1 mbps up on my cable modem. I can chat with my family half way
across the country in perfect real time using MSN messenger. It's been
my experience that all of Intel's nicer web cams perform as well as
mine. I paid just over $100 for mine when it was brand new.

Hope that helps!