At the recent RC33 conference, a paper called "SPSS TwoStep Cluster -- A First Evaluation" was presented by Johann Bacher,Knut Wenzig,and Melanie Vogler -- see
http://www.soziologie.wiso.uni-erlangen.de/ws0304/info/rc33/pp-w-abstracts-rc33.pdf The authors comparison of TwoStep vs. latent class concluded: "... SPSS TwoStep algorithm realizes the right cluster structure only for 3 of the 12 tested models (25%). The success rate of LatentGOLD and ALMO is clearly higher and reaches 100% for LatentGOLD resp. 66% for ALMO - in other words: LatentGOLD predicts the correct number for all analyzed constellations, ALMO for 8 of the 12 models. LatentGOLD shows the best performance."
