The better team almost always wins this game (the 2001 game was the last big upset, and we all know how that happened). That said, these games tend to be closer than they should be, especially when Michigan wins.
Sparty does usually play their best game in this one, though. However, after last weekend and the way their whole season has gone, I think it's fair to question how motivated they'll be. They've also been dominated in all 3 games against top opponents this year, even moreso in Columbus and Madison than at home against Penn State.
Matchup-wise, Michigan's defense should be dominant considering they've shut down comparable to better offenses (eg. Notre Dame and Iowa), and they dominated this game last year, too, and now the losses from last year's defense aren't really that apparent with the emergence of Paye, McGrone, Thomas, and Hutchinson.... Offensively, it's clear that the Sparty defense isn't as good any more. Hopefully the passing game will be more aggressive downfield, but that's been frustratingly infrequent. As good as Charbonnet and Haskins have been of late, I'm not sure Michigan will be able to dominate on the ground in this game..... Of course, turnovers will have a big impact, as always, and Michigan has been better at not committing them along with forcing them of late..... Michigan's special teams also appear to be at least somewhat better.
I'll say 31-7.