This Money magazine article gave out two reasons why sometimes I Bonds may be a better choice than TIPS (Treasury Inflation Protected Securities):
1. Tax Issues:
For securities to hold in a taxable account, I Bonds can delay tax on interest until the redemption date. You will incur phantom interest for holding TIPS (you owe tax on the interest every year even you wll not receive the interest until you sell TIPS).
For I Bonds, you can cash out by redeeming the bonds -- only three months' penalty applies for holding period less than five years. For TIPS, you can only sell in a secondary market. Due to the lack of transparency of the secondary market, you can hardly tell if you have a good execution.