I actually like it more when the playlist selects what's playing, rather than just highlight it. My reasoning for this is that the "select" effect is much more pronounced than the different color, and draws my eyes more. So if I glance over to the pane to see what's playing, my eye will be first drawn to the selected item, then to the different color item. Since I'm typically wondering what's playing when I look over there, having the playing song auto-select is more efficient.

I'm guessing I'm one of the few people who prefer that though :P