The Blades could have moved to the top of the First Division with a victory, but Ipswich bossed the game from start to finish.
Shefki Kuqi's fourth Ipswich goal set the home side on their way, and second-half strikes from Ian Westlake and Darren Bent sealed a comfortable victory.
Richard Naylor and Chris Bart-Williams returned to Ipswich's starting line-up after suspension, while Michael Brown recovered from a foot injury to start for the visitors.
Naylor, who has scored five goals from defence this season, came close to a sixth in the early stages - but his header from Matt Richards' cross drifted inches past the post.
Bent brought the first save of the afternoon from Paul Gerrard in the 16th minute with a low left-footed shot.
The home side were dominating as Bent wasted another good opening and Jim Magilton tried his luck with a 25-yard strike minutes later.
But Ipswich did get the goal their efforts deserved after 43 minutes.
Kuqi raced clear in the box, only for Chris Morgan to bring him down. The defender escaped a red card, but the Blades were punished as the Finland international slammed home the spot-kick.
The visitors' first noteworthy chance of the game came in the 57th minute, and top scorer Jack Lester, with three goals in his last five games, should really have scored.
Chris Armstrong's cross landed perfectly for the former Nottingham Forest forward six yards from goal, but his shot was parried by Kelvin Davis.
The Blades were made to pay 10 minutes later as Westlake doubled Ipswich's advantage.
The youngster finished off a neat move involving Magilton and Kuqi with a well-struck shot into the bottom corner.
Brown brought a stunning save from Davis with four minutes remaining, but Joe Royle's side were in full control and capped a fine display with a third goal at the death.
Westlake's low cross was converted from close in by Bent for his fourth of the campaign.