We homeschool, but not on-line. I think it depends a lot on the kids ages. One friend had thought about doing the on-line last year, but decided against it. The plus was that it would make their DS16 responsible to someone else, but the downside was the inflexability of it. They thought that it is difficult to "change directions" mid-year if a class isn't working out the way they thought. Also, not as "christian based" as they wanted.
Another girl we know does the on-line. She left public school for a health reason and they feel it's very similar to public school, just on-line. That is their comment, not mine.
I like that we belong to a co-op (I teach 10/11th grade physics - Apolgia curriculum, even though my kids are younger). It exposes our kids to other kids/teachers, but we still control the overall direction of the classes.
I think it probably also depends on what's offered on-line in your state.
Oh, just thought of another - another family in our co-op has their kids take one advanced placement class on-line per year. They have had VERY good luck with this.
I'll be anxious to hear what other say. (if you don't get many responses, maybe post on the community board?)