Microsoft Live Earth
Both Microsoft Live Earth and Google Earth have 3D modeled buildings. However, Microsoft Live Earth's are vastly superior both in number and in quality. Google Earth shows about 5-10 buildings in Toronto where Microsoft shows hundreds.
Google Earth: Not Much of a City Scape
Live Earth: Now That's a Downtown!
Both applications take up a large amount of RAM to run. Looking at Task Manager, Google Earth was taking up to 800 megabytes of RAM and Internet Explorer was taking up to 600 megabytes. I assume this must be for caching of data.
For smaller towns, both applications seem to be equally poor. For example, searching for Port Hope, Ontario yields a poor grainy image in both cases likely because the high resolution satellite imagery is simply not available.Google Earth
Google Earth is much richer in terms of content overlays and more flexible in being able to turn them on and off. My personal favourite is the Panaromio overlay which geo-maps personal photographs to locations from hundreds of thousands of users around the world.
Microsoft Live Earth has a feature called "Birds Eye" which does a map of photographs to the map taken from different angles. This feature is not available at all in Google Earth.
Microsoft Live Earth has very nice traffic reporting features. I was able to check the 401 highway in Toronto, see the busiest spots to avoid and also it provides construction updates as well. Google Earth does not have this feature at all.
Both applications provide directions. However, Google Earth has a feature that allows you to "play" the route. The camera will follow the route through the directions showing you in 3D how to drive to your destination.