From a usability perspective only (not security), what do users find more comfortable?
A site with its own login page (need to sign up but then easier to login;
or a site with remote authentication (don't need to sign up, but have to be redirected to login).
I think currently users are more comfortable with just signing up on site, however that's mainly because that's what most websites do.
If done right OpenID and OAuth can work very well. The way StackExchange does it is particularly good. Explain what it is, show that if you have any of a certain type of account can you just press the button, and also what to do when that button is pressed. It almost makes signing up for new StackExchange sites fun (almost).
Another option is to use Facebook Connect which add a "login with Facebook" button to your site. When clicked the user doesn't leave you page but instead is presented with a Facebook style modal dialog to login, and then allow you app to get to your user date. You can even ask for special things like access to some of the users date or permission to post on the users' wall if you wish. The obvious downside with this is not everyone has a Facebook account (although over half a billion people do).
FWIW, I once left a site because it asked me what my OpenID was, and I didn't know how to find it. When I first used StackOverflow, it took me a second to realize why there was a URL field there instead of a username/password field. So if you use OpenID/OAuth/LiveID/etc. don't say that to users -- it's an implementation detail.
My answer pretty much agrees with what's here. I'd say put twitter and facebook connect as signin options at a minimum. I'd ALMOST go with saying remove the Username/Password option altogether (not worrying about password resets and all the mumbo jumbo that goes with it are some great perks) but there is always the "slight" chance that you'll lose potential users who aren't familiar with it.
Me personally, I get annoyed whenever a site forces me to create another username/password combo and it's gotten to the point where I actually debate if using that site is worth the hassle. I expect this to become closer to the norm over time.
Whether you use single sign on (SSO) or a local method, you're still requiring the user to create an account and they probably don't want to. Try to put as much of your site's functionality in the anonymous/public realm as possible, and limit the amount of interactions that require an account (ex., you don't need an account to learn on StackExchange sites). Suck them in with goodies before you spring a defined relationship on them.
Some situations where I think SSO has a clear benefit:
You're integrating with another site or application. This could be Google, Twitter, or a company's LDAP install (think intranets and other company wide applications).
You're providing it as an alternative to a local account. I know that I almost didn't create a StackOverflow account because of SSO, but I already wanted to be a part of the site badly enough that I was willing to invest. It would have been easier if I could have created a local account, and left SSO to those who like it.
And as you've already seen, the reactions to SSO are generally positive on this site. I don't think this is surprising when you consider the people who use this site:
They already bought into SSO on some level when they used it to create an account on this site.
They most likely have an above average proficiency at using web technologies. After all, they're posting answers on a beta Q&A site about UI.
Cheers.
The brand "OpenID" is prohibitively tech-y, and if presented with just those two options (OpenID or local) users will probably choose "local."
However, look at Gawker, HuffingtonPost and other seriously enormous site needing authenticated participation. All of them support Facebook, Twitter, etc. logins, and most users use those options instead of local login.
The OpenID/OAuth process (single central login, distributed authentication) is preferred by users, as long as you don't actually tell them that's what's happening.
