I bought my Bass Compactor and my Sunn 1200s off of eBay and I got good deals on both. The only reason I've never bought a bass or guitar off of eBay is that I'm a real stickler for "play it before you buy it."

That said, you need to keep an eye on seller ratings and watch out for auctions that go overboard:

A friend of mine put up Squire he bought for $99 new; no reserve, no real asking price... The damn thing went for around $200.

So there are some dummies out there who have no idea what they're doing who will pay WAY more than a guitar is worth, but if you keep an eye out, there's still deals to be had.