You can use sax & dotty's player/hoster to play your cdg and mp3 files inside zip files.
It's been a long time since I researched this, but look here for some help:
Basically sax & dottys is a GUI front end that works with winamp plus the cdg plugin.
It has a cue so you can enter singers name in a list and cue them up as the singer's turn comes up.
I don't know about playing these files directly off a DVD.
Most people I know place their song collection on a portable hard drive, and play them off the hard drive, using a laptop.
I've got 21,000 songs archived to DVDs
Another helpful tool is Audiograbber, if you have a compatable burner/reader, audiograbber will rip your original CD+G karaoke discs to bin files, which can be converted to mp3+g pairs and zipped up like the ones I mentioned in the first line.
Also do a search for mp3+g toolz
This program helps you to convert your zip files, or helps to convert bin files to mp3+g pairs. It also will zip up your mp3+g pairs.
If you are into using the old method of playing CD+G, you'll have to burn them to CDRs with a compatable CD burner that reads/writes the subcodes where the graphics of CD+G are stored.
An alternative is to convert your mp3+g pairs to AVI and just play them like movies. There's a cdg2avi converter that does this, but it doesn't seem to work that well. The quality needs tweaking.
It seems the current best method to play karaoke, is to use a laptop and play the zip files, using sax & dottys hoster. There are other similar players/hosters like sax & dotties out there. You may have to search for these.