I bought it for my daughter last week. £19.99 in game. She loves it. You can play your own tracks and put backgrounds on. Her favourite is the 3d animated night club. You can pick the person you want to watch, choose their clothes, dance style, camera angle etc etc. I had two of them (5year olds) one with the microphone and the other with my XBOX live headset screaming at the tops of their voices.
You can upload your own music and strip out the vocals to make your own karioke track.
You can download more tracks etc from XBOXLive. Haven't done this yet.