In theory, this is a better method of software delivery. It's far more efficient to centralize and utilize only the needed server capacity, rather than having consumers maintain supercomputers to play an hour of Crysis on their day off.

However, it obviously must work. The technology is the biggest thing in question at this point, and there's no telling whether this will be viable right off the bat. On the other hand, I don't see the pricing as a major issue. Once the infrastructure is there, competition will come (GaiKai is already on the way), and costs will level out to whatever the market will bear. Corporate America has never really done streaming games before, but they've been figuring out prices for a long, long time. The money will take care of itself.