Vonage is a real VOIP box that is based on industry standard technology.
Magic Jack is a USB key sort of device that piggy backs off your computer and its internet connection, and was created by a retired engineer as a hobby.
If you want a real phone line replacement, you're probably better off with a real SIP-based voip line such as broadvoice, vonage, viatalk, etc... (by the way, vonage is one of the more expensive SIP-based voip lines because it was the trend-setter).
If you just need a second line, or perhaps a business phone, or not sure you really need a phone line on a regular basis, I'd say go for the magic jack. Just remember, it relies on your computer being on and connected to the internet, as opposed to other real SIP services which give you a box to attach to your phone line. Its more like Skype in that regard, and in fact, I would compare this service to Skype back in the day when they first started offering flat rate calls to/from landlines, and charged 19.99 per year. It could be used as a landline replacement, but its not exactly the same thing.