I think you guys are missing a key point. Mobiles.
The iPhone demo was especially interesting. Obviously only a fool would drop a nice PC for OnLive, but what about their phones or netbooks? While I'm still not convinced this isn't vaporware, if it works as expected it could make low powered devices into viable gaming platforms. If I could play my PC games on my phone I would never even consider a PSP or DS. Of course there is always the issue of input buttons or resolution.
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PC: AMD Athlon II Quadcore 635 (OC to 4.0ghz) , ATI Radeon 5770 1GB (x2)
MacBook Pro C2D 2.8ghz, 9600m GT 512 iMac: C2D 2.0, X2600XT 256