Interesting question.
Think a lot of the answer of whether it can work or not depends on the character of those involved.
My mate and I for instance, have been together now for...eck, good question...three, four years I think, and that doesn't seem even vaguely likely to change. However, that wasn't through a dating service. Was through a random email regarding my views on a few bits of classic mythology, and therafter an IRC network. A dating service as such, I have never used.
We however are both pretty reclusive, and don't go out to parties, discos or anything like that. And I at least, have social skills which rate somewhere between bad and non-existent. I also live in the middle of nowhere, and through these various factors, probably never would have met anyone else.
Because we started out some 500 miles apart (Locations being Aberdeen and London(ish), and the communication was purely internet based, that lack of skill in "interfacing" with others wasn't so much of an issue. Over the course of a year or possibly more, the frequency of communication increased, eventually phone calls, and an actual meeting, the rest is history. I don't know if I was just lucky, or if this sort of thing working out it common, I'll leave working that out to someone who understands human behaviour better than I.
I'm by no means the only one in such a situation - and where such circumstances are present, I can see it as being a very useful thing. However, I certainly don't see technology as the answer to every problem, and think that the traditional approach is still the most appropriate for the majority of cases. Find out where people go, and go there and meet someone.