I just read some other articles and they were saying it is 720p, but its highly compressed garbage. Probably comparable to youtube. Another person was saying they tried it out at E3 where they had a demo setup, and the input lag was huge on the system.
After reading that article though about its costs, I don't see this going anywhere. At least with a service like steam you still have the actual game data on your harddrive, and I'm sure valve would provide means for users to play the games offline in the event they did fold. With this, what do you do if the service goes down?