12V vs. 120V Lighting

12V lights are slightly safer (not that 120V lights aren't) but are more susceptible to voltage drop over long wiring runs. Since you are already set up with 12V, why not stick with that? There really isn't a significant difference between the two.
 
The transformers aren't all that prone to failure and if one does, an Intermatic PX300 (about as good as they get) can be had for well under $100.

Switching out to line voltage lights would also require you to run a #8 bond wire from the niche to the pool junction box (if there already isn't one) which would be an added headache and difficult/ impossible with the niche underwater. A special purpose potting compound has to be applied to the bond lug in the niche which may or may not cure underwater. If the niches were designed for low voltage lights to begin with, they may not even have the bond lug inside anyway.

I'd gladly change out a transformer any day....
 
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