In my town karaoke is a stable at bars and just about every one of the 600 Mexican restaurants we have. Anytime I have been in and someone was singing, I wished for a mute button. It seems like no one who can sing ever tries karaoke.
I would never sing karaoke myself, but Rock Band Bar nights might be fun. I like to play Rock Band and as long as I could be on an instrument and not sing, I would be good. Harmonix is signing bars up to be official Rock Band spots and offering materials to help get people into the location.