...Its a nice idea but I'd personally rather have the hardware and run stuff locally.
I'm sure there will be others sharing your thoughts. However, if this thing really takes hold, it may be out of our hands.
Before launch, one could argue that iRacing was going to change the landscape of sim racing in a similar way. I certainly thought so, but it didn't. It ended up providing another choice, another direction for sim racers to follow. Pricing aside, it still requires fairly robust hardware to participate at its full graphics capabilities and certainly entry-level PCs cannot participate at all. That's where OnLive may succeed where iRacing has not in terms of becoming the defacto standard for sim racing.
If you think about it, why would you not want to play your video games this way? Again, aside from the financial aspect of membership which is currently unknown, you'll have the opportunity to play the latest, greatest, most graphically challenging titles on your PC laptop, or a Mac Mini. The ability to create graphics that even the most advanced PC hardware could not presently handle can be used with this content delivery system.
I think if enough people decide to adopt OnLive as their main destination for playing video games, the console hardware market may not be able to justify continued development for the long term. Game developers will not have to worry about porting a different version for the XBOX, another for the PS3, and yet another for the PC. They will have access to all those that no longer had enough juice to play the latest games, plus the entire Macintosh community. If I'm a game developer, I'm loving this.