There seems to be a lot of questions and confusion between the differences between GeoIP and GeoLite (commonly referred to as "GeoIP City Free" or "GeoIP Lite") so I will attempt to highlight the major differences below.
Cost
GeoIP is MaxMind's brand of commercial IP geolocation database offerings. License costs depend on the granularity of the database. GeoLite is MaxMind's free IP geolocation database. Both are subject to certain license terms. Distribution requires separate license. Please contact MaxMind for additional information.
Data Source
GeoIP and GeoLite draw from different seed data sources to generate the IP location data. GeoLite draws primarily from publicly available data and is less accurate, especially at the city level. GeoIP draws primarily from internally collected sources and is more accurate. For more information on data sources, please see: http://www.maxmind.com/app/ip-location-explained
GeoLite accuracy is approximately 98% on the country level and 70% on the city level for US cities. GeoIP accuracy is over 99% on the country level and 80% on the city level for US cities. GeoIP will also have better coverage/accuracy for international cities. http://www.maxmind.com/app/city_accuracy
Data Correction
All of our development resources are primarily dedicated to our commercial products. As a result, we will only be making resolution corrections to the GeoIP databases. GeoLite data is provided as is. If you would like to see if you would benefit from the increased accuracy of GeoIP, you can use our online demo or request a trial account to test your IPs: http://www.maxmind.com/app/locate_ip
Data Structure
In terms of data structure, GeoIP and GeoLite have the same data structure so upgrading should just be a drop in replacement. However, data quality will differ (see above).
