Personally, I feel collusion is a HUGE problem with online poker. As I've stated before, I do better at slots than poker, except in a real casino, where I do much better with poker.
If you do better at a game that pays back 90% +/- than playing poker you are doing it wrong. Sorry, but I just had to say that.
There are two poker rooms/networks that have extremely poor game security IMO. Bodog/Bovada and Merge Gaming security are widely regarded as unacceptably bad. Bodog because they intentionally removed player safeguards from their software, and the new software was immediately proven to be insecure. Mere Gaming seems to have trouble catching anything, and when players catch colluders, Merge seems to just keep the money. Unfortunately, they are two of the limited choices U.S. players have. Playing for low stakes on these sites would seem to be just fine, but not for any type of serious money.
The large poker rooms are proactive. Cheating takes place, but the big poker rooms have huge security departments where the only job is to track games and look for this stuff. I have received many emails in the past "Player x was caught collusing with player y. Here is a refund". It is nowhere near the problem some people think it is. I have seen plenty of cheating and soft playing in live games. I am not sure they are substantially safer. In fact, it is harder to catch in a live game than online because there is no record of the hand afterwards in a live game. In a live game you cannot go to the floor after the hand and say "Could you look at that hand for me to make sure it was legit?" like you can online.
I've busted several online players this way, and so have many others, which is why Bodog gets such poor security marks. Players have no way to know who the player is and if there is a pattern, or if the player got up from the game and it is another player, or that the same shady player from yesterday is at your table again and needs to be watched when that other player is there. Bodog started releasing hand histories after 24 hours that show all cards, but no tracking software or hand replayer will work with them anymore because of these problems, so the info is largely useless or would take hours to put together a case.
Play at the large sites, and if you are in the U.S. just do not play for any kind of serious stakes. Nobody is cheating is micro games. One thing that I look forward to in the U.S. is that cheating will be a serious crime, and players will have much more to risk than just their account balances. All it will take is a few high profile criminal cases, and it will be a major discouragement.