IE7 doesn't support data-URIs. If you still support IE7 (it's not dead yet), sprites are still your friend. Not to mention, data in the css can get kind of unwieldy if you're encoding many or large images. Keeping it in a sprite keeps it tidy.
so you'd never have to manually update the sass file if the image changes and then you can just do some magic to get it to work with ie7 with mhtml if you are going to support it.