I found an interesting article from PC World with some commentary from guys who tried it:
http://www.pcworld.com/article/161852/onlive_will_it_beat_xbox_360_ps3_and_wii_at_their_own_game.html
Some interesting excerpts:
Sid: When we finally got hands-on with OnLive, I gotta admit, I was impressed. I tried my hand at some Crysis multiplayer, running in 720p, and the experience felt smooth...surprisingly smooth, in fact, considering that the graphics were being rendered on a server down in Santa Clara.
Darren: I know, they tell us that the server farm locations need to be within a 1000 mile radius, so I'd be interested to see if the service can still deliver the goods if I'm playing from someplace a little more remote. That said, yeah, it was a fairly solid frame rate -- what would you say, about 30-35 frames per second? There was a little bit of hinkiness, but not too much.
And there was almost no perceivable lag (trust us, we looked).
Sid: I agree that Crysis is a sight to behold. Unfortunately, a little bit of that visual luster is stripped away due to the aggressive, high-speed video compression needed for OnLive. When I played Crysis, I definitely noticed visual artifacting that made colors look grittier and more banded, giving the overall impression of playing the game in one of those Fox.com TV windows.
Darren: Yeah, I was noticing some muddiness as well (it wasn't as pronounced when I was racing around GRID) but I can forgive it a little right now. I mean, this is a closed alpha test version of a service that won't launch until sometime in waaaaay late 2009. So I'm holding my nit-pickery to a minimum for now.