It is very typical that the majority of people criticizing this service have never actually tried it!!!
Rather than criticizing things for theoretical reasons, why not try it first and then comment.
I've tried Onlive on Mac & PC (new and old equipment), and the experience has been entertaining on all accounts.
Yes, slow internet connections can be a problem, but the same argument can be made about on-line gaming on PC, Mac, Linux, Xbox 360, PS3, Wii, etc. If you don't have a good connection, the gameplay will be affected.
The service currently only runs at 720p resolution, but this is still better than Nintendo Wii (who managed to sell millions of units). At a price point of $99 for the console (tv adapter), controller and a game, the Onlive console package should be a hit this holiday season.
The internet will not crash, and that is crazy for anyone to assume this. If you don't have at least a 5Mb internet connection, don't bother trying this service. That is the bare minimum and it will not allow you to play if your connection does not meet those requirements. If you have a wireless connection, you are better off bridging your ethernet & wireless connections to bypass having to use their buggy beta version.
This service is good for casual gamers who like to try before they buy, and people who want instant access to their games. I use an XBOX 360 controller with Onlive and it recognizes and maps the buttons automatically after plugged in. This is great, because the button mapping is identical to games on the XBOX 360, so there is not learning curve.
The other complaint that I've seen is not having a physical copy of the games purchased, but even if onlive offered downloads, they would have to have additional servers to perform this task. This would no doubt increase the cost of everything and would bring you back to the dilemma of needing a computer that could run the game. This would be counter productive to the onlive service, so I understand why they do not offer it. Since the onlive service is now free, the only risk of losing something you purchased, is if they fail and go out of business.