There is no increase in latency with game streaming. In either case, signals carry information both ways. The difference is where the greatest delta lies. With traditional online games, the latency lies between the client and the servers/peer clients. With game streaming the greatest delta is between the user and the client. But when all clients are essentially co-located with the servers, you are not waiting on updates from all players to be processed and sent to you. You are only waiting on your client to update your display and you are sending your clicks and key-presses. Your upstream is tiny, your downstream is not huge at all. Any latency is the same latency that you would experience in all online gaming based on your connection to any given server.
Thing is input lag is a bitch and really noticeable, client server lag not so much. If you have a game that has good net code, 100ms between you and a server is ok. If you go and get 100ms between your mouse and display it is hard to use. Try it some time, turn on the processing on a TV, that'll put the lag in the 100-150ms range. It is a pain even using the desktop with that kind of lag.