It used to be pretty easy to fake a caller ID in the U.S. I remember doing it years ago in one of my classes, calling my cell phone from another line using my own cell number as a spoofed caller ID. I could make it look like I was calling myself - kind of creepy if you did not know what was going on. I was using one of the services on the web - I won't post any links or names of companies here that offer /offered these services. Most of them shut their services down but you can still find thier sites on the web if you do some creative searching.
Is it illegal in the United States? Yes.
One year ago today, on February 23, 2010, the Senate passed a bill called the Truth in Caller ID Act of 2009 (S:30). It then went to the House of Representatives and was passed. Both the Senate and the House passed it by Unanimous Consent.
A couple months ago on December 22, 2010, President Obama signed it so it is now a law, currently illegal to cause any caller identification service to knowingly transmit misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value.
The law includes VoIP services like Skype and has an exemption allowing users to block their caller ID if they want to. In addition, law enforcement is exempt.
I've already been asked - Was Wisconsin Governor Scott Walker's prank call caller ID spoofed? I have no idea.