If you have ever used a jailbroken iPod or iPhone, you may have used TuneWiki. Lyrical (App Store) uses the new access to the now playing to give you similar functionality. When you have a data connection (WiFi or 3G/EDGE), this app will lookup the lyrics for the current song. Lyrical is free, and works well from my experience. If you are not currently playing a song, you may still lookup the lyrics by selecting a song from your library. There is also an option to search for lyrics to a song you do not currently have. Lyrical is a great app for anyone running 3.0 on their iPhone or iPod touch!
I bought premium , its a nice app, very very simple to use lovely layout and UI. Good app id liek to see more lyrics added to database as i can't find many for my songs :/, also maybe a search feature when looking in library ?
Search is something I'll definitely look at adding in an update. As to more lyrics, we rely on LyricWiki.org for our lyrics, which is user maintained. This means that whatever song is missing has a good chance of showing up pretty quickly, and if you know the words and feel like pitching in, you can add it yourself.
Just got the free version today. I didn't realise there was a paid version - I'll have a look at that now too.