Now i can see it as a feasible alternative to people who can afford a fast internet connection but dont want to upgrade their PC's every year or so.
I think if people can afford the kind of bandwidth that will be needed to play onlive games at anything like a reasonable resolution and for the amount of time the average PC gamer plays, being able to afford to upgrade their PC every year would be a trivial expense.
I have stopped upgrading out of habit myself, the PC I have at the moment plays everything I want just fine, aside from adding more ram and a bigger HD, it's exactly the same machine that it was when I built it three years ago.