I just started playing Rock Band 3 and I noticed that there is an option for vocals called "Pitch Correction". What does this actually do? Does it change the scoring at all?
No, it doesn't have any effect on scoring, it just makes your voice sound better coming out of the speakers. Joystiq puts it this way:
The game will use iZotope's real-time pitch detection and correction to make you sound less like yourself and more like someone who can hit a damn note occasionally.