Marc Shaiman, the musical's producer, provided the biggest laughs of the pre-telecast ceremony as he and lyricist Scott Wittman accepted the trophy for best musical show album.
"For everyone who thinks that Broadway is full of nothing but Jews and gays, Oy! ... me and my lover just won a Grammy!" shouted Shaiman.
Hairspray is based on John Waters' campy 1988 movie about a teen-age girl in Baltimore obsessed with a '60s TV dance show.
The folk-rock duo was honored with a Lifetime Achievement Award by the Grammys. Other such honorees included Etta James, Johnny Mathis, Glenn Miller and Tito Puente.
Simon and Garfunkel have reunited periodically since ending their partnership, but this was believed to be their first performance together since 1993.
Their appearance led to speculation that they may tour together, but Garfunkel said there have been no such discussions.
"It's possible," Simon said backstage. "We don't have any plans."
After singing, accompanied only by Simon's acoustic guitar, the pair put their arms around each other's backs - and they received a standing ovation.
Simon and Garfunkel said they were aware that "The Sound of Silence" could be taken as a political statement with war brewing, but that they weren't looking to use the forum for this purpose.
The rapper had worn the bandage to show support for a friend imprisoned for robbery. But he said the news media made such a big deal about the facial accessory that it lost meaning, so he recently stopped wearing it.
"I just wanted to let it go," he said.
"It's a shame that none of the R&B categories are televised," the 27-year-old said while picking up one of her two trophies. Her song "Little Things" was chosen Best Urban/Alternative Performance and Voyage to India won best Rhythm and Blues Album.
The Grammys are increasingly becoming less an awards show and more of a TV performance. Only 11 awards were scheduled for the three-hour portion of the show on CBS. Ninety-three others were given in a ceremony before cameras rolled.
As a result, Grammy organizers rushed through pre-show awards to make sure they were all finished in time. The contrarian India.Arie didn't like that, either.
"I came for the opportunity to have a platform," she said. "Now that I'm here, I just want to share my opinions with you."
She encouraged fellow artists to get more inspirational - and less lewd - in their lyrics.