After searching around on the internet I found two apps, one called WalkieTooth and another called Atasoy LANPhone.

WalkieTooth

WalkieTooth allows video and audio chat over WiFi, WiFi Hotspots, Bluetooth and WiFi Direct. To set it up:

1. Download from Google Play on both devices


2. Select the Camera icon on both devices


3. On the first device select 'Server', under 'WiFi'


4. On the second device select 'Client', under 'WiFi' and input the IP address displayed on the first.


5. You should now be in a video call, press the camera icon to turn on your camera

Walkietooth allows to establish a full duplex communication channel between two Android devices, letting them to communicate for all the time needed, better than having two walkie talkies.

Atasoy LANPhone

1. Download the APK from the 'official' site


2. Install the APK by opening it (You may need to enable 'Unknown Sources' in Settings > Security first)


3. Open the app and press the menu button on the navigation bar


4. Select 'Settings' to open the settings page


5. Find the option named 'Camera' and choose which camera you want to use


6. Repeat process on other device and press Menu > Refresh List to scan for devices

Screenshots:


     

For just WiFi chat, files and audio calls, then these apps support it:

• Wi-Fi Talkie FREE


• BlueFi Phone