The added complexity and lack of centralized control isn't worth the cost of cycles.
I don't know. OnLive can't scale very well as is. A liberal estimate would be four game instances per server, which means 250,000 servers for a million players. But if you're spreading that around, especially on players' machines that aren't being used at the time and may be fewer hops from the destination, it may be worth it. Plus, it'd be a good first step towards a mostly decentralized gaming infrastructure.
Edit: The more I think about this, the more it seems this is precisely (or at least should be) where they're going with this.