Actually, traditional printers make as many mistakes as the POD printers. However, the traditional printers can offset the costs of making corrections on the press line, since their customers are normally getting thousands of copies printed at a time. Running off 1,000 waste copies at the slowest speed the press runs at until everything comes out right ends up being rather inconsequential to them and their customers. However, a POD company printing 10 or even 50 copies of a book simply cannot factor that sort of effort into ensuring everything is right. PODs can only afford 1-2 copies per 10 of your print run as waste copies for early corrective measures. And lets not forget that POD is a computerized manufacturing process, so folks expect there shouldn't be many mistakes to begin with.
I suspect that the cause of lulu's high mistake rate is a reliance on a sheet-fed printer or copier-based low end POD system, rather than the roll-fed printers used on the high end POD systems.