Yes, in fact using VoIP services (such as MagicJack) with IVM and it's autodialer feature is common. Usually however the VoIP service uses an open protocol (e.g. SIP) which allows IVM to communicate with it directly, elminating the need for a voice modem connected to the magicjack which is then connected back to the computer (unnessecary redundancy anyone?)
Granted, most VoIP services aren't completely 'free' like MagicJack but there are many who charge very little for calls (e.g. unlimited north america for $20/mo, or 1c/min to certain destinations).
Without proper configuration, most VoIP services will provide a similar quality to what you described for Vonage. This is not unique to Vonage, and if you configure your network devices properly and tweak Vonage's settings you should have no problems with audio quality, nor bandwidth issues (slow downs).
For future reference, these are a few tips for improving audio quality:
- Configure your internet router to forward ports used by the VoIP device
- Enable and configure the 'Quality of Service' feature on your router (if available)
- Go into the Vonage online control panel, and change the bandwidth settings to use low bandwidth
- If you are on a low-end high-speed connection, consider upgrading to a 'faster'/greater bandwidth plan
