The Hendrix "All along the Watchtower" is probably the most prominent example of a cover being more recognized than the original. To me, Odetta's cover of Dylan's "Times they are a Changin" belongs in that category.
I like a lot of other covers more than the originals, such as Marianne Faithfull's version of "Ballad of Lucy Jordan" (Dr. Hook), and both Roy Orbison's and Nazareth's cover of "Love Hurts" (Everly Brothers).
For sort of novelty covers, I like Shonen Knife's cover of "Top of the World" (Carpenters) and Nouvelle Vague's cover of "Guns of Brixton" (Clash).