The biggest reason why? While SingStar rewards you for hitting every note, pitch perfect and with identical phrasing to the record, Lips allows you a little more freedom to add vibrato and subtle grace notes. Unfortunately, it's probably generous to a fault, dishing out mega scores for - frankly - woeful performances, and even going oddly bezerk from time to time. When my two year old daughter grabs the mic halfway through Coldplay's Yellow and the game doesn't seem to be too worried, I begin to think that something has gone wrong.
Other features, meanwhile, seem like a good idea but don't work out in execution. You can, for instance, sing over your own MP3 collection, either on the HDD or on an attached MP3 player, but there is no way of importing lyrics and the scoring is suspect, to say the least. The motion sensitive microphones aren't perfectly implemented, either, with a noticeable delay between you, for instance, clapping and the system registering the clap.
For me, the lack of a proper single-player progression with tracks unlocked and high scores to beat isn't really a major issue - who wants to play a Karaoke game on their own? Besides, the game makes up for it with excellent multiplayer mini-games that have you singing to gather water to put out the fuse on a bomb or battling another player. You could also argue that the easiness actually makes it a more enjoyable party game, and that the fact that one player can't fail a duet through bad (or non-existent) singing works in its favour here as well.
It's hard to hate any game that features Radiohead's 'Fake Plastic Trees', Duran Duran's 'Hungry Like the Wolf' and Queen's 'Another One Bites the Dust.' On the other hand, Microsoft has a lot of catching up to do in the online arena. The selection on the Lips store is pitiful in comparison to the 400 plus songs available on the Singstar equivalent, and there's also no true online competitive play and no way of putting humiliating videos of performances online. As it stands, Lips will make the odd party or two go with a swing, but I doubt you'll keep coming back to it in the months ahead. A decent effort, but one that needs some work.
On paper Lips is a Singstar beater. In practice, it's fun but seriously hamstrung by badly executed features.