Earlier this year, OnLive debuted its OnLine Desktop app for the iPad. The app offers users a virtual desktop environment that includes Windows 7, Microsoft Office, Adobe Reader, and Internet Explorer (which allows iPad users to watch Flash-based web content). The service comes in both free and paid versions that include 2GB of cloud storage and OnLive plans to expand the service with more advanced plans for both end users and for businesses.

While users and reviewers have been largely happy with OnLive Desktop, it seems that Microsoft isn’t. After being mum on OnLive’s decision to release the app and service, Microsoft announced this week that it views OnLive as violating its license agreements and essentially pirating Windows.

At issue is the draconian puzzle that is Microsoft’s licensing system and how the company charges for virtual desktops.

Last month, OnLive launched its free cloud-based Windows desktop app for the iPad. OnLive Desktop provides iPad users with a cloud-based Windows 7 desktop that comes complete with the standard Microsoft Office apps (Word, Excel, and PowerPoint) and 2GB of storage. This week, the cloud-gaming company expanded the features and storage available to OnLive Desktop users via new subscription plans – one of the most notable being that OnLive Desktop can now play Flash videos and content.

The company will also be adding a more full featured “Pro” plan that will let users install additional Windows applications and an enterprise service that would allow companies to configure and manage virtual Windows desktops on the iPad’s of employees.

If you still haven’t gotten over the fact that your iPad doesn’t have Adobe Flash player, than OnLive Desktop Plus may soothe your pain. As you may have guessed, the new app is a premium version of OnLive Desktop, which brought Microsoft Office to the iPad earlier this year.

In addition to Office, the premium version offers Flash Player and a PDF-enabled web browser, but it comes at a price of $4.99 per month.

OnLive made headlines earlier this week when the company announced a new iPad app at CES which brings Windows 7 to the iPad, allowing you to run Microsoft Office applications like Word, Excel, and PowerPoint.

Those of you who are interested in the app and you live in the U.S., you can grab it now, for free, from the App Store.