I have Ubuntu 12.10 and PyKaraoke was not working before I worked in 12.10. It now opens but I can not add folders to the library. Only the Home folder.
This seems to have been a bug in wxGTK. It's fixed in wxGTK 2.8.13 which is not yet available in Ubuntu 12.10.
As a workaround make sure not to go directly into the directory you are selecting, but to just select it and then hit Open. This did the trick for me.
Please see http://trac.wxwidgets.org/ticket/14525 for more information.
As for Python3 compatibility of pyKaraoke: Running a quick 2to3 over it shows that there are modifications needed to the source so that it will be available for Python3.