The mic looks identical to the ones used in Karaoke Revolution and X-Factor, so I'd take a guess it's USB. Engadget also say it's USB. And finally I found blurb that states nunchuck controls for the dancing game mode so it's unlikely the mic will plug into the remote also (since you would have to switch about).
Another interesting tibbet is that in the video maker mode you can use 3D glasses lol.
The karaoke engine is a blantant rip off from Singstar, which I guess isn't a bad thing because it works a lot better than Karaoke Revolution. It'd be cool if you could use the Singstar mics with this but I doubt it since they aren't compatible with any other PS2 titles.
As for the game there are 40 songs (mostly rubbish and/or that have been in just about every music game to date already):
# ABC (The Jackson 5)
# Baila Me (Gypsy Kings)
# Boogie Oogie Oogie (Taste Of Honey)
# Brick House (The Commodores)
# Canned Heat (Jamiroquai)
# Celebration (Kool & The Gang)
# Dancing in the Street (Martha Reeves & The Vandellas)
# Dancing Machine (Jackson 5)
# Don't Cha (Pussycat Dolls / Busta Rhymes)
# Fergalicious (Fergi)
# Get Right (Jennifer Lopez)
# Get The Party Started (Pink)
# Girls Just Want To Have Fun (Cyndi Lauper)
# Groove Is In The Heart (Dee-Lite)
# I Want You Back (The Jackson 5)
# Im A Slave 4 U (Britney Spears)
# It's Raining Men (The Weather Girls)
# Karma Chameleon (Culture Club)
# Kung Fu Fighting (Carl Douglas)
# Le Freak (Chic)
# Let's Get It Started (Black Eyed Peas)
# Love Rollercoaster (Red Hot Chili Peppers)
# Love Shack (The B-52's)
# Mambo No. 5 (A Little Bit of...) (Lou Bega)
# Milkshake (Kelis)
# One More Time (Daft Punk)
# One Way Or Another (Blondie)
# Oops I Did It Again (Britney Spears)
# Pop Muzik (M)
# S.O.S. (Rihanna)
# Stars (Simply Red)
# That's The Way (I Like It) (KC And The Sunshine)
# Tu Y Yo (Thalia)
# U Can't Touch This (M.C. Hammer)
# Virtual Insanity (Jamiroquai)
# Walking On Sunshine (Katrina & The Waves)
# We Are Family (Sister Sledge)
# Y.M.C.A. (The Village People)
In addition to singing you can also come up with dance routines and customise your characters and make your own videos. There are also some multiplayer minigames.