Dark Horse,
You're right that being able to stare a guy in the face can be very important when playing poker. But, poker is also about mathematics and strategy, which can be done with or without seeing your opponent. I agree that online poker misses a major dimension of live poker, but it still has enough to draw people to the virtual table.
Online poker also has a lot of benefits that live poker cannot. Games are available 24/7, as long as you have a computer and internet access, you can find a game. Game selection is exponential compared to live poker. Virtually every poker flavor and limit is available from tournaments to shorthanded ring games, Omaha, Hold Em, Stud, or anything else. Plus, table selection is substantial, with so many people playing online. Plus, hands can take seconds rather than minutes. Live, 40 hands per hour is a very fast pace. Online, it's not unusual for a shorthanded table to go 100 hands per hour. Multitable, and you could be doing 300 hands an hour or more. Although, I wouldn't advice doing that without a lot of experience!
I've played both, and the difference between live poker and online poker is like night and day. Online, forget about getting much of a read on a player, because even if you can figure a guy out, poof, he's gone and another stranger takes his seat. Live, you might see the same guys day after day at the local card room. Both online and live have their own characteristics, but both are viable forms of poker.