The point of a Daily Scrum is to ensure that team members spend face-to-face planning time each day with a collaborative focus on the Sprint Goal. If team members are distributed, then everything needs to be thrown at maximizing the quality of the communication channels.
Video conferencing is the best option because it carries at least some if the non-verbals. Audio is a poor second choice and if this is all you have it should be of excellent quality.
Charles has a good list of resources on distributed, offshore, and multisite scrum available here: http://www.scrumcrazy.com/My+Prefer...+Resources
One other option us to change the session format to "walking the board". Each task on the team board, which should be electronic so all can see it, is considered in turn. The team collectively determine what needs to be done, and by whom, in order to progress it. This is a delivery-centric approach used in Kanban. The disadvantage is that some focus on the Sprint Goal is lost. However, the approach can be used with reasonable success even over low bandwidth communication channels.