Should small colleges offer online instruction?

We typically offer arguments in favor of small colleges, small class sizes, personal interactions, etc. While I personally favor all these, I am not sure whether we truly achieve significantly better outcomes just because, for instance, a class is small size. My colleagues teach intro classes that have between 70 and 100 students each. I always cap my intro classes at 40. Not that we have done any systematic studies that measure how much students learn in these competing formats, but I am tempted to conclude that there is not much difference in the outcomes. If every one of us learns differently, then does it also not mean that some students might prefer the anonymity of a larger classroom for their learning, while some might like smaller classrooms so that they don't feel lost? I mean, that is only one example, right?

We can take it one more step; most students prefer not to come to class at all. Not anything new. I suppose as long as we have had classes, we have also had students who were not thrilled to be in the classroom. So, there could be a demographic group that actually will prefer online education? So, ought we not serve them? Well, that is the question handled in this Q/A with the president of

Brenau University, a small college in Georgia, has a strong focus on distance education. The institution offers 11 online degree programs, most of them career driven, an uncommon focus for a liberal-arts college. Brenau's president, Mr. Schrader, says that about 40 percent of faculty members teach the online courses.
Q. Why did a liberal-arts college like yours decide to start an online program?
A. We did it to meet the communication needs of the current generation of students. If the majority of the world is going to learn online, the liberal-arts schools will have to make a decision. They can't give up on their responsibility saying they don't like online courses; either they participate in them and do it well, or they throw in the towel.
The complete interview is here in the Chronicle of Higher Education