One of the better cases of this is Christine Lavin. Her songs are brilliant (albeit quirky and whimsical), and she's a delight in concert -- surprising to the point of a little dangerous. (If you get called up on stage, you never quite know what's going to happen to you.) But her albums can't quite reproduce the sheer silliness of her concerts, so they are only good, rather than great.
This is being driven home to me by the album currently in my car. It's one of the ones I picked up at the radio-station CD sale last fall (you remember -- the one where we bought 100-some-odd CDs, going broke because the price was too good). It's called Big League Babe, and is explicitly the Christine Lavin tribute album: a two-record set, with a wide variety of other musicians covering her songs.
Frankly, it's delicious, and shows off Christine's songs well. It does a great job of pairing singer to song, with a bluesy version of "The Amoeba Hop", a lighthearted duet on "Artificial Means", and beautiful (and relatively serious) renditions of pieces like "The Attainable Love" and "Volunteer". Unlike most of Christine's own records, this one is a pure studio album, done by good studio artists, and the result is quite fine.
Not even remotely new, but worth picking up, especially if you already like Christine's work. This is a loving tribute, and well worth having...