I tend to think that people prefer the first version that they hear of a particular song - so for example, for me the Sioxsie and the Banshees version of "Dear Prudence" is better than the Beatles original.
This is compounded by people not realising that the song that they are enjoying is a cover version - I was quite surprised when my Mum sang along to Dear Prudence...there you are thinking a particular song is quite cool and your Mum joins in
Having said that, some covers do work best - Hurt as mentioned above, but also I'm beginning to rate Johnny Cash's version of "the Mercy Seat" alongside the original Nick Cave song.