You have a talented graduate who has a faculty job offer and a research lab job offer. Modulo the specifics of the univ and the lab, where should they go?I think it's a great question, in part because it points out fantastic biases in the system. Of course almost all professors will almost always favor the university position; after all, they chose academia, so there's an inherent bias toward that direction. In my experience, students also are biased toward academia. Almost all students who work for a Ph.D. go in from the beginning with the mindset that they're going to be a professor, and that can be hard to let go of.
But very few people in computer science (both in general, and theory in particular) go on to become professors. There just aren't that many professor jobs. Perhaps one of the first conversations advisors ought to have with students would start, "I'm sure you want to be a professor when you're done here. But just so we're clear, what would be your backup plan?"
Of course, research labs shouldn't be just a backup plan. They're different from academic positions in ways that can be very appealing to many people : no need to continually find funding, no teaching, no tenure pressure, and generally more emphasis on accomplishing things as a group rather than individually. There's no single right answer to the question of whether to go to the lab or the university; it should depend on the personality, life goals, and needs of the student.
And a final thought -- life goals can change, and one can change one's mind later. Many people switch from labs to academia or academia to labs. Some people -- as Muthu himself knows -- can make multiple such switches throughout their career.