It depends of the size of your company.

• for small companies (<20 users): the online version is by far the best approach. Not only for upgrades but also because it cheaper, its perfectly installed (with pads, mail gateways, ...). Some small companies think they need custom developments/modules but it's because they are unaware of what OpenERP can do with high level customizations. Check the unlimited implementation assistance offer there: http://openerp.com/oe_pricing It includes unlimited changes in screens, workflows and reports for just 100€/month (for one app)
• for companies between 20 and 50 users, it usually requires an expert that analyse the need to decide if you need custom developments or not. If you can stay on the standard it's way better for the long term but if your need is very specific you'll have to use onsite.
• for companies with more than 50 users, it's an on premise installation most of the time because: 1/ usually the software have to be adaptee to their way of working, 2/ they have the budget to pay custom developments.

We sold 147 implementation assistance based on the saas last year. Over these 147 customers, a lot wanted to go on premise because they needed custom developments. (don't have an exact number here but I would say 25%) We proposed them a two-phases plan: we cover 90% of their need on the saas using the unlimited customization services. For the missing 10% of their need they can contact partners to handle on premise installation and custom developments.

Over the 147 companies, only 6 went from saas to on premise. On the other end, we have 2 companies per week that are on premise and want to move to the SaaS. One can easily switch on premise->saas or saas->on premise as it's the same software.