We have both and my 4 year old really enjoys both. Sometimes it is a game to pick which one to play with. The leapster TV has a writing stick that he had problems with at the beginning and to some degree does today. The V-Smile seems easier to him, but we had it first, could just be familiarity.
Both have similar graphics...don't expect anything fancy for a newer TV. If he is playing a game on one, I couldn't tell you it was V smile vs Leapster. They are not as bad as someone indicated earlier, but they are not like high end computer graphics or a movie either.
We do not have the gameboy, nintendo DS, Xbox, etc... type games yet...much too young for those. Iwould think they all have significantly better graphics, sounds, etc.. But the Leapster is what $50 versus $300 for the latest Xbox? And the games are 10-20 if you get them on sale for the latest games versus $40-50. It is a completely different level and really helps them to learn to use the jumpng button, joystick, etc..
My 4 year old loves it and my 2 year old loves to watch. He plays often with his cousins who go up to 10 years old...and they seem to enjoy it when they are at the house.
I think both are a great start for the kids. You can't go wrong with either.