I think I've tried all of the major online banks over the past few years. Other than two that went out of business (Wingspan and Lighthouse--both were absorbed back into their bricks and mortar parent banks) the best I've found so far is First Internet Bank of Indiana. I know, it sounds a little goofy--but they are profitable and provide a really good product and excellent customer service. Fee-free for a $500 minimum balance, ATM fee reimbursement, fee bill payment, etc.

I recently opened an online account with Citibank also. I wanted a bank with more of an international presence as I travel abroad a lot. The account opening process was rather byzantine and frustrating. For example, they won't give you an account unless they can call you at home and have you answer the phone. It's not good enough for you to call them back in response to their message (never mind that I already have two credit cards with them). But in spite of that, once you get set up the product is decent. You do need to keep $1500 in the account to avoid fees, but if you live outside of their service area (mainly NYC, I assume) they will reimburse ATM fees. They also gave me $100 to open the account (found the link somewhere here on FT). I think they are offering $150 now. The links can be found in this fatwallet forum Unfortunately I have found Citi's customer service to be sub-par.

So bottom line, I didn't find the mileage offers to be worth the hassle. I didn't like the product offered by any of those banks and found you really have to pay attention to avoid fees--they're tricky! My advice: if this is going to be your primary checking account make sure you pick a bank with good customer service.

As for the concerns raised by Stefan Daystrom above, I found the service offered by any of the major banks in New England following all of the consolidation over the past few years to be simply horrible. So I'm perfectly happy to give my business to an online bank. I can't imagine any situation where I wouldn't be able to get at my money if I needed it. Maybe my needs are simpler than his.