It is not so much a matter of 'better' or 'worse' as 'different'. GS runs in Windows kernal-mode. This has both advantages (very low latency, very high polyphony) and disadvantages (limited RAM available for use). GVI runs in the general user application space so it can take advantage of more memory than GS. However, GVI does not include a full bodied editor like GS does. GVI also has some limitations on polyphony (although more than one copy of GVI can be run concurrently and the limitation is still pretty high - 256 voices). GVI can run standalone or as a VST instrument. GVI can run .gig or .gsi files but not .gsp files.
I am sure there are others who can give you even more info but at least here's a start for you. I am a pretty new user of all this myself.
GS3 can be very unstable when anything else (even just Cubase/Sonar/etc) is running on the computer along with it, causing blue screens and other issues. This is because of how closely it ties in with the computer's hardware for performance reasons. After going through headache after headache after headache with it, which many others also experienced, I realized the only way to make it work properly was to buy a separate computer dedicated to running it and connect it up to my main system.. it's been running quite nicely like this for over a year now.
If you don't want to have to get a different computer just to run GS, GVI is the best choice.
GS3 can be very unstable when anything else (even just Cubase/Sonar/etc) is running on the computer along with it, causing blue screens and other issues...
My experience has been different. I run Sonar, ACID and Vegas on the same PC with Giga.
Personally, I think the bigger dependency is on the drivers and hardware in the system, rather than applications. Consider that Giga's Kernel mode processing runs completely separately from applications, but it runs cheek-to-cheek with drivers.
I've had similar problems to dalek3. The only way I got GS3 to work was to tie in a new computer using a cool FX-Max program. Although GS3 works ok I'm still getting weird sonic glitches from Giga Pulse. There are occasions that GS3 does weird things as well. But that's mostly fixed.
If I were you I'd go GVI. I'm thinking about upgrading (small cost) since GOS are too lovely to not feel I can use them at any time without worrying about system issues.
...I'm still getting weird sonic glitches from Giga Pulse.
It could be that your computer is not optimized. In stock form Windows often goes off and performs stupid tasks, like checking if it's time to run the screen saver, checking if there's a CD in the drive and other stuff that you don't want interrupting your audio.
I use many of the tweaks listed at http://videoguys.com/TweaksWINXPVE.html It's a video oriented site, but the key is that it is optimized for real-time performance. However, note that for GS3 you should give priority to the system, rather than applications.