I only agree with using papers during rehearsal, not during Sunday Worship (unless its a hymn...then i might consider.) My rule of thumb is, if they don't the words, then I'm not even going to sing it on Sunday until they do.
Paper during worship is a "no-no" for us as well. When we work on a song, the soloists usually get the song well in advance, before the musicians, so when the choir is learning the song, the soloist already knows his or her part without having to use a lyric sheet.
I believe in ministry and singing from the heart. If the spirit tells the lead singer to minister, we're gonna follow wherever he or she goes.