I agree. I'd much rather have an actor who can carry a tune. I'd also like to add that there's more to singing Sondheim than "belting out the songs." Look at the CRAZY rhythms in "By the Sea" - it's the unbreathable song - I listened to the demo of Carter singing it - she did it wonderfully! Try teaching those rhythms to someone who's never sung before.
The main issue I have with her singing is that it sounds tenative, but she's SUCH a good actress that I really don't mind that much. It's nothing to make a huge issue about. This is how THIS Mrs. Lovett sounds. Angela Landsbury's Lovett sounds different.
Madame Morrible: "So you take the chicken, now it must be a white chicken. The corpse can be any color. And that is the spell for lost luggage!" - The Yellow Brick Road Not Taken