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Yeah MMO's are all we/they have to look at to do a comparison. EvE Online, the MMO that i play, is one big server farm with all the connected users in the same universe. EvE regularly gets 40,000+ people on at the same time. In the busy systems the server just cant cope. It is quite a regular thing to hear of people requesting to CCP (the developers) to put certain system on priority servers if a huge battle is being planned. And even then the server has been known to crash with fleet battles of around 1500 people. Let us not forget that this server is only running the core game number crunching engine, graphics rendering is done by the client. I have no idea how the people behind onlive think that they are going to run everything on a set of servers.
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