I might add that literature becomes good because it does reflect real life in new or old and comforting ways. It offers different perspectives that help the reader consider ideas in ways other than his or her own. It causes the reader to have real life emotions or to discover real life solutions that might never have been considered had not the literature been read.
I like the previous answers, especially post #3 about life being "edited." How many times in my life have I wished I could hit the "delete" button and re-write my reaction or response.
On the other hand, I have to disagree with the statement on the whole. In my opinion, good literature is the stories that truly reflect real-life. In that way, by nature they cannot be better than life. The biggest part of what I love about the books I love best is that they contain something that mirrors a part of me or my life. I am relating to the characters or the situations in a real way, rather than a contrived "happily ever after" expectation of perfection.
I supposed that one consideration that makes literature better than life is the fact that literature is life edited and shaped for us. If you had to choose between reading a novel and watching an unedited hidden camera recording of life during the same period of time in which the novel takes place, I think most of us would choose the novel. The novel has structure, patterns, plot, symbols, suspense, irony, twists, surprises. A videotape would have little of these elements.
If you don't believe me, come over to my house, and I'll show you the hours of film of my family's lives that we have taken over the years. For the most part, it is so boring that even we can't watch it.
I suppose you could say that this is true because in literature, anything is possible. If you immerse yourself in literature, you can live a number of different lives. You can live the lives of different characters (at least vicariously) and you can "experience" other times and places through the stories that you read. In this way, you can argue, literature is at least more interesting than real life.
Why is literature better than life? I think that it's because with literature you can choose which life you experience , while with life , you are basically stuck with what you have been 'given'.