My attention was drawn a little while ago to the beta of this being around in the uk I downloaded it, and gave it a go and was pleased with the results, but wouldnt use it myself.
Pro: The video quality was very good, and i had no latency issues, i tried out a racing game and an action game, both fast paced and i had no issue with input latency. It's clearly a fantastic way for those with lower end graphics cards to play games, You can also pay less than full price for games in exchange for access for a limited period, i.e rental for games you might only play through once.
Con: You have to buy your games again to use within OnLive, which can then only be used in onlive. So you may have to pay again fro games you already own, and if you ever leave onlive youd have to buy again to regain access. Bandwidth. The video resolution was good but used every byte of my 10Mbps connection, rendering it unusable for anyone else, or if others used it i'd see a reduction in quality. Note the implications of 4.5+GB/hr for those with caps When my provider throttled me to 2.5Mbps, quality was noticably reduced (though latency was still good) and eventually onlive game up, stating i had insufficient speed.
This is a fantastic concept, but as others have highlighted it effectively becomes another form of DRM, but allows gaming on non-gaming machines at good cost