The only reason I could see people preferring to play on Kaillera would be freedom of controller usage, but that is not really comparable when getting technical since I did use my arcade stick for about an hour on XBLA and it was unreal, and I can use a keyboard but not the exact layout I want. I might actually be able to hook that back up now as well. This of course required effort, but it's still there.
In the most standard situation for Kaillera, you must play using the good connection setting, which has a minimum 1/4 second delay. There is a lot of button loss as well, there's virtually no loss on XBLA, even when the frame rate drops in bad connections. If you play using excellent it is manditory that both players have less than 30 ms to the server. Input starts getting a little screwey on excellent with the new clients and emulinker and the quality is about equal to the average XBLA game. Very unstable, disconnects a lot. LAN setting is now worthless. Constant ghosting of buttons, inputs go crazy, desyncs like crazy, but the quality is very good, about the same as a better than average game on XBLA. It also requires pings in the teens or lower.
Now here's the kicker. I can play people in California on XBLA with no noticable lag on either side. On Kaillera, this is impossible. Also, there are hundreds, perhaps thousands of times more available players.
In closing, I don't know why anyone would prefer Kaillera over XBLA when both are available.