This Onlive thing is almost certainly a ripoff for the majority of people.
They will have you accepting an agreement where they can't be held responsible for the net lag, because they can't of course guarantee the latency that your internet provider or your hardware or all the intermediate nodes introduce.
Their quality of service will just consist in keeping their servers consistently up and load-free, but even in those conditions you might find the games unplayable, with nobody to hold responsible.
And there _will_ be lag: I've tele-worked and assisted remotely with connections going to different parts of the world, and even with big enterprise level servers on the other side, a simple desktop view sometimes lags visibly and sometimes lags alot.
Your common videogame will have to send much bigger chunks of graphical info (more animation on screen means less compressibility of the data than your average desktop activity) at a higher resolution, plus sound.
Basically it will only work for those that can connect with their servers with a minimum of node hops and a greatly consistent low latency connection. For everyone else: lag-fest. Enough for turn based games, but forget playing the likes of CoD or Prince of Persia.