Personally I couldn't justify Onlive since you lose the ability to mod a game, and even worse you likely don't own the games you're paying for. I tried the demo of Assassins Creed Brotherhood and I was unimpressed. The image quality was really quite low, and there was a noticeable lag (im on a 5GB cable connection) which I didn't expect. However this might be different for those with a subscription. Your mileage may vary...
Mods are supposed to be on the way, but it doesn't bother me either way. I like the convenience of being able to play on lots of devices without worrying about saved games or meeting specs.
Also, I find the image quality to be pretty good. Not as good as my high end PC, but at least as good as the Xbox 360 or PS3.
My main reason for buying is the price. It's hard to beat buying a good older game for $5 or pre-ordering a new one and getting a free console or another game free.
No lag for me either unless I play wireless.