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Vocaloid is a commericalised engine made by Yamaha and is produced for professional use. You have to buy it from the respect studios but overall the majority of Vocaloids are of a decent quality and even the worst Vocaloid does not have as "bad" of a quality as the worst UTAU. The engine is backed by researchers and is an international product. The files are saved in Vocaloid midi files, VSQ or VSQX. There are a lot less Vocaloids (about 43 at time of answering this). The studios own the copyright on the vocal and each studio is left to handle the commerical use of their own Vocaloids.

UTAU is a freeware software with thousands of voicebanks. Most are not that great and are of low quality and this has been one of UTAU drawbacks. Still, with thousands of voicebanks to choose from, the software has earnt a lot of attention as there is pretty much a voicebank for every vocal type. The UTAU engine also is written and pretty much run by its fanbase. Users own the copyright on their voicebanks that they produce and some have even registered them for commerical use.

Its really hard to debate over the matter of which is better as some users of the software can be really passionate.

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