It's certainly good enough for online video quality-wise. Just download youtube videos in webm (vp8) and mp4 (h264) and compare them visually, I can't decide which is which by just looking, and in terms of file sizes they are about the same, sometimes webm is a bit smaller and sometimes the mp4 file is a bit smaller. If you do test with ssim or psnr, or examine the video on a frame by frame basis you will most likely find that h264 retains better quality per bit than vp8 but it's not by some wide margin.
Originally Posted by xeekei
Like others said this should remove the last obstacle from making vp8 (and hopefully later on vp9) the official standard html5 video codec.