I would agree that the USPTO needs additional funding though I think there is a widespread misconception about how Congress is funding the USPTO.
Congress is not lately in the habit of actually giving the USPTO money. Instead Congress allows the USPTO to keep a portion of what they earn. In fact, this year Congress will be conducting a "fee diversion" to the tune of $200 million.
But don't worry, I'm sure they will do something really useful with your fees.
"OnLive has filled the global patent pipeline with a portfolio of hundreds of applications with thousands of claims"
Perhaps this is part of the problem. I don't think that the patent system was designed for people to flood it with applications. I don't know enough about OnLive to make a personal judgment on the validity of their claims, but I can't imagine that hundreds of patents are necessary to protect an investment.
It really doesn't matter how may examiners the PTO hires if us in Industry actively and aggressively overload the system.