might depend on the cost of water, heat, and soap, plus keeping the area clean and dealing with health inspections. With paper cups, all you have to do is make sure that there is a trash bin.
That said, as a customer, for long sits, I'd rather have a mug. it's lest wasteful, doesn't make one feel rushed.
Also, paper over styrofoam, always. Styrofoam is very hard to recycle from what I hear, and takes forever to break down. Paper can be recycled, they sell recycled paper cups and sleeves, and also breaks down quicker.