This has been an interesting question for the past decade. There are several things which enter into the equation. The two most important are defects and general quality. Aaron Shephard falls on the side of Createspace in a radical change this morning. He’s always taught that Lightning Source is necessary for quality.
Defects are a normal aspect of printing
Printing is an amazingly complex manufacturing process. Most people tend to think that on-demand digital printers are much better in terms of less complication. On the surface, that would seem to be true. Digital printers are basically computer output and simply work or not. None of the complex controls which are a normal part of offset lithography apply.
On the flip side, none of the controls you need for the upper levels of excellence are available to toner-based printing. Digital on-demand will never come close to matching 6–8 color commercial printing. It does closely match full-color web-offset and black & white printing. But spot color is not available, nor are letterpress options like foil stamping, embossing, die-cutting, and the rest.
It can be said, that digital on-demand does lessen the normal defects of printing like hickies, plate cleanings, color shifts, and so on. But defects do happen. It has been argued that Createspace has more than most, and that’s probably still true. But Amazon’s support is amazing, and a reprint for defects is usually no problem. It’s the same with Lulu and Lightning Source.
General print quality is different
Lightning Source has always chosen to go with glossy toner which produces superior results for images. Createspace uses matte toner which provides superior readability. Lulu seems to use a better paper to get superior images and better color (when compared to Createspace) plus good readability. Regardless, Lulu comes close to matching Lightning Source in general quality.
So, the deciding line is distribution
Lightning Source is supposedly required if you want traditional distribution channels. If your focus is brick and mortar, LS is supposed to be required. I think that is misguided, unless you write mass market best sellers. They are also expensive and complex, as far as production and distribution costs are concerned. Dealing with discounts and returns is not my idea of worthwhile activity.
Createspace is required. It gives you Amazon and favored selling status (always in stock) on Amazon. They also distribute to everyone else for free. Even if you use LS, you need CS for Amazon.
Lulu is best for spiral-bound workbooks, saddle-stitched booklets, and so on. They also have a simple hard cover option. I commonly use them for my personal copies because the quality is better. Their color covers are commonly exceptional. In addition, they still offer downloadable PDFs.