Bill Gurley has written a good post on the perceived (and possibly) actual value of IPOs for technology companies.
I think entrepreneurs, early employees and investors create better companies if they have the ambition to build companies that will go public as opposed to being acquired by a larger company. A focus on going public (in 5, 6, 10 years time from founding) creates the need to build a strong company (as opposed to a great product) for the long-term. I also believe it creates and reinforces a predator instead of prey mentality. And that's a very good thing.
Obviously there are opportunities that warrant building a VC-backed company around a product with a trade sale in mind, but in the online services space one should be wary of raising too much money (likely not more than a Series A) if a trade sale is the goal. A strong company that could go public would also become an acquisition target for large technology companies and it can make sense to sell rather than go public, but that should be an effect of and not reason for building a strong company.