if you want SQLite, you need WCS v0.77 (and that supports no .txt saving)

WCS 0.75 supports only .txt

the txt file is better for small server, it has less overhead, everything is loaded into memory.
sqlite performs better on large database and offers new options, like eg. removing players who didn't play for 14 days. Or a .php script can easily parse this file and use it for a nice stats website.

we planned to switch to sqlite, because the syntax is similar to MySQL. But now, the mysql stuff is broken and we cannot setup server-sharing levels/xp