I think the main reason for the success of Casting Show contestants over X-Factor contestants is that the Casting Shows were about finding talent and giving contestants a chance to show the public and the powers that be in MT what they could do. Plus, the contestants all wanted to work in the industry (or get a leg up from understudy to leading man/lady) - there was none of the fame chasing that you get in X-Factor contestants.
I think also that the X-Factor winners tend to be dropped by Cowell/the record label very quickly. They aren't nurtured in any way, and if Cowell isn't interested in them, he won't put any effort into getting them the right material or marketing. Then, when they inevitably don't set the world alight with their first album, he drops them! Conversely, if he is interested in a contestant, he'll pull out all the stops for them, even if they didn't win! 1 Direction were mediocre on X-Factor and came fourth if memory serves, but Cowell poured all his resources into making them huge international stars!
As a perfect illustration of the gulf in sheer class and talent between the Casting Shows and XF, here are two contestants performing NYNY!
