For us, it's mostly about the size of the event. Most of the mainly karaoke gigs we do these days tend to be small private parties. These are probably 25 a year, with half of those being at homes.
It's more common to have them add karaoke for at a dj gig. Mostly dj, with a mix of karaoke. Our systems run it perfectly, and the mixer we typically use at all gigs has very good vocal effects.
We don't do weekly bar gigs. We will do private party gigs at bars.
In my experience, it's very rarely been sound quality that drives people away from a karaoke gig. Inappropriate volume has been. Some believe the louder the better. Big mistake. An effective KJ needs to read the crowd, which includes people not singing.
Other mistakes.....
too much singing by the KJ.
Playing songs in exact order....I find it more effective to play songs the crowd will like. Those slow sappy love songs by a terrible singer that no one knows.....and isn't spending money...goes to the bottom of the list.
Basically, a great KJ with 2 k10's and no sub will beat a mediocre to poor dj with tons of gear all the time. With what bars are willing to pay these days, it doesn't shock me at all to see less and less equipment.