As a Satellite NOC Manager, this question is right "up my alley".
The Propogation delay of approximately 650 ms is inescapable for geosynchronous satellites, used by both Directway (Hughes) and Starband (Gilat). Both systems are based on Ku-band frequencies.
Traveling 22,300 miles each way to the satellite and back, even at the speed of light, is time consuming compared to the typical propogation delays of fiber networks.
You CAN get good bandwidth from either system, although Starband offeres slightly higher speeds and does not implement a "FAP" (Fair usage policy) to limit your downloads.
For gaming, it will, impolitely put, SUCK. The latency is just too high.
The next generation of satellite internet will use the Ka band spectrum - far higher bandwidth - and many will use LEO (low earth orbit) satellites, which will greatly diminish the latency problem.
They are due to market in 2004, maybe late 2003.
Satellite Internet is great for the boonies, if you have no other source of broadband connection. But for gaming, it just won't work well.
Turn-based gaming would be OK - but interactive gaming (like Quake, etc.) is pitiful in relation to terrestrial solutions, even dialup.
If you're a gamer, pass on Satellite Internet. Otherwise, it can work very well. The Market for Satellite Internet is NOT urban areas - it's designed to offer high-bandwidth out in the area NOT served by DSL, CABLE, etc.