While technically this game has some slight improvements over the last one, the only real difference is the duet mode. Sounds nice, but I haven't got a second mike yet, so I haven't tried that. Other modes are pretty much the same.
So as far as which game is better, song selection is the only thing that really matters. I like more songs from 2, but I enjoy both games, especially since you don't want to sing the same songs over and over again.
The new rooftop stage is really neat, although the stages really are just cosmetic.
If you like doing Karaoke with friends, any of these games are great. I'm sure after I've played this one a bit longer, I'll know a few more songs.
My only complaint is I wish you could combine them all together to sing songs from any of the previous games. That would be the feature that would make 4 super hot.