Let me start by saying that my opinion may be biased since I have no experience with online schools. However, I'm going to try to be as unbiased as possible. When I started engineering school I needed a lot of help (and I still do). For this reason, I am very glad I went to school instead of taking online classes. I'm afraid (and again, I don't really know) that online classes wouldn't provide the support that you might need with your work. Living on campus was the only way I made it through some of my classes. I was able to walk down to the library for help, or simply walk down the hall to a classmate's room to find a study buddy. And, I'll tell you now, being able to talk to your professors one-on-one is INVALUABLE. If you are an independent worker and excel at teaching yourself from a text, then you might not have the problems that I did.
Also, whichever school you decide to go with should provide you with opportunities for work after school (internships, permanent jobs, whatever). I have made many contacts with business professionals from meetings held on my campus. Again, I'm not sure how this would be handled with online classes. But, be aware that a big part of the engineering world is networking, and being on a campus is an easy way to accomplish this. I'm sure that online classes would be cheaper, which is probably a concern you have. Let me assure you, as a 21 year old who is already over $65000 in debt (don't worry, most school aren't as expensive as mine), I understand monetary concerns. However, I have never once felt bad about signing a loan paper. I know that in the end it will pay to go to a great school. But, not all people feel this way. This is more of a personal decision that you'll just have to weigh out. I think the biggest thing that should weight into your decision is your work ethic. If you are able to teach yourself and motivate yourself to work (don't need a study buddy, etc.), then you would probably do just fine with online classes.
Concerning Bachelor's vs. Associates: it greatly depends on what you want to do when you are done with school. A Bachelor's would probably provide more opportunity (go to graduate school, etc.), but may not be required for the job you would like to do. To find out, I would suggest finding someone who does the job, or a job similar to, what you would like to do and talk to them about it. This is really the only way to find out. Since I am still a student I cannot tell you what kind of jobs require which degrees.
Please don't hesitate if you have any other questions, or if I didn't answer your question.