Oh god, onlive sucks. It's like playing games on low-med settings, first off(Although from what I noticed, onlive changes the settings frequently to match your connection, so maybe a higher connection would make the games more visually appealing). Secondly, it's 720p only and it upscales horribly if that's not your native resolution. Quite literally, some games look worse than the console versions. Some games have decent FPS, others are very jittery. Batman Arkham Asylum played just fine with little noticeable lag, but dirt 2 was just terrible in terms of delay. Again, I guess it's dependent on certain games. We certainly had no idea where the servers were, but we tested it on a server across the country and we got around 50 ms, so it is highly unlikely it's an issue of our internet service.
My friend gets around 7 to 9 Mbit/s, and onlive took up maybe 4 or 5 Mbit/s. In a little over 10 minutes of playing there was about 420 MB downloaded and around 10 MB uploaded, So expect to take big hits on your bandwidth. There were a few drops, at which point the FPS went down to 20 or 25, and the graphical quality looked like a ps2 game being played on a 50 inch 1080p widescreen(A bit of an overexaggeration, but I think it is fitting for those who have done it).
Personally, I think it's a good idea, implemented horribly(except of course for the fact that you can play on mac OS). A subscription fee and I have to pay for games at retail price? Hell, for 25 dollars more, at the time of this writing, I can get just cause 2 and 35 quality games on steam. I can, however, see something like this taking off in a few years when higher internet connection speeds are standard, though I highly doubt it can overtake PC gaming that is reliant on your local hardware.