It is all a question of balance, music is about enjoyment, but enjoyment for both the performer and audience.
I would consider a get together in someones house where there is no charge and no money being paid to a performer as a different situation from a public place where there is a cover charge or a collection,
i have seen one or two performers perform well from crib sheets but generally my experience has been the opposite., those that i have seen perform well are probably those that have practised a lot with a crib sheet, that is better than not practising when using a crib sheet. practising with a crib sheet in my opinion means not just rehearsing the words but practsing looking up at the audience from time to time[ momentarily looking away from the sheet etc], a good idea peerhaps is to practise in front of a mirror   
finally it is not up to me to dictate what should happen, if someone does not like what is happening they can leave, unfortunately in my experience this generally means that the more practised performers who dont use crib sheets tend to leave.