I'd mostly go with Paulo's ideas of not singing a particular song if either :
1) I know it's one sung by someone else there that doesn't know very many songs. It does take time to build up a repertoire (spelling?) and it can be offputting for someone who's still nervous about getting up to sing to hear the song they were intending to sing sung first by someone else.

2) The person who passed on the words and tune to me is there. Although I may check with them that they are not intending to sing it that evening. I tend to feel that if they were good enough to pass a song onto me they should still have the choiceof singing it, after all they didn't have to pass the song on to me. Unless it's a very long session most people prefer not to have the same song sung twice.

3) the author of the song is there (although again, if I am feeling confident that I'm not about to mangle their work, I may ask them if they mind me singing it)

I suppose I regard it partly as a matter of courtesy, partly as a way of avoiding comparisons and far from seeing it as limiting the songs sung, I believe it actively encourages people to increase the variety of songs that they sing, so that they can avoid repeating one that has already been sung that evening.