It all depends on your gaming situation. If top-notch graphics are your primary concern, yes, OnLive sucks. Multiplayer for most games sucks since it tends to just be amongst other OnLive players so there's a smaller number of them.
Or, if you are a cheap-ass like me, it's great. They have had numerous sales that rival Steam's. 75% off coupons a multitude of times, for any one game on the service. Where can you catch a game a week or so out from release at 75% off? Also, I pre-ordered Saints Row 3 on OnLive for $17.49, which I hadn't seen beat on Steam until their summer sale.
I have a computer that can play most games on Ultra settings. I also have a laptop that cannot. I also have the microconsole (gotten for free with another game purchase) for the big-screen TV. It even works on my old-ass EeePC. I can play the same game on any and switch between them easily.
For me, OnLive has been wonderful to try out games (30 minutes free time for most games, not some crippled demo), or for games I'm not really sure are worth the $50-60 they want for PC/Console.
Latency hasn't been an issue for the last year. When the service first came out, there was about a half-second delay between when you moved the mouse and when you saw it move on the screen. That was fixed and games play far, far better. OnLive isn't going to replace all gaming everywhere (what is it with Slashdotters that every tech must wipe out everything else??), but it is a fine service when you put these factors in perspective.