Thanks, I will try resetting network connections.
And, yes, I do know that both the receiving and sending phone need to be Iphones and using Imessage. You are also right that the forum would be flooded if it was broken. I'm just wondering why all of the sudden after updating it doesn't seem to work for me. Even if I turn off "Send as SMS" it still sends and receives SMS. It never did this before so something is amiss.
Also, both ends have to have a "solid" broadband connection for iMessage to work.
Turning "send as SMS" doesn't prevent the message from being sent as SMS, it is supposed to prevent the message being sent as SMS, without first prompting the user for permission to do so.
If resetting network connections, doesn't resolve the issue, I would log out and back in to iMessage. In fact, I would probably log out of iCloud, iMessage, and FaceTime, then log back in using that order.
You don't have to actually send a message to test iMessage functionality. Open messages, select someone with an iDevice, type one letter, and look at the send button. If it is blue, that message will be sent as an iMessage, if it is green it is going as SMS.