My ex was a friend of a friend that I first talked to on MSN - despite thinking she was hot from her photos and she was funny/cute/sweet, I wasn't going to tell her on MSN - for one, it's a little weird that we hadnt even met and secondly: if the main method of communication is MSN...how do you know that you would like them as much in real-life? I was lucky - she was as great to know in person as she was to chat to on MSN and a few weeks after meeting, we hooked up. But no, don't say anything on MSN until you are sure you like them in real-life (even if you know them in real-life: make the main method of communication face-to-face first, before you decide to do anything).
EDIT - and as for the actual 'telling them' part - if you flirt a lot in the face-to-face bit, it soon becomes apparent anyway, ask him/her (sorry, I don't know your gender/orientation) over to watch a film, get closer on the sofa, go to cuddle up and voila! Sorted.