Hey modmyi, i thought i'd share how i got lyrics to my iTunes songs since it took me some time to find a way that actually worked 
First of all i use Windows 7 with iTunes 9.1.1.11 and this is all done with the opensource software Songbird with the lyricmaster plugin.
Note: This could possibly damage your iTunes library, backing up your library regularly is always a good idea.
Start of by downloading Songbird from here: http://wiki.songbirdnest.com/Develop...Nightly_Builds
It's a nightly build(beta) which seem to be the only version that supports Windows 7, the version on http://getsongbird.com may also work though i haven't tried it.
Startup iTunes and mark ALL your songs, then right click and press convert id3 tags, in the window select version 2.3 then press ok (this step is only needed to force iTunes to reload the song information, i don't know much of id3 tags but i believe you can use any version from 2.2-2.4 without losing any data). After it's done fully close iTunes.
Now install Songbird, then download and install lyricmaster which is available at: http://addons.songbirdnest.com/addon/1230
Now start songbird and go into tools>settings>import media, there configure the path to your iTunes library.
For example here:
Code:
C:\Users\[username]\Documents\My Music\iTunes\iTunes Music Library.xml
Then press import library and let it work (it may take some time and be quite demanding).
Now go into tools>addons, there you find lyricmaster, press settings and configure accordingly, i recommend that you only check "artist name" and "track name". When done press OK (NOT "scan entire library...")
When done and you can see all your iTunes library in songbird you want to select all your songs and right click then press edit metadata. Go into the lyrics tab seen on the top, then press "batch". Now let it work, it is downloading lyrics for all the songs and it will take time. When done press save. You can now go through your songs in songbird and see the lyric icon to the right on the songs which lyricmaster downloaded it to.
Now exit songbird and open up iTunes, to make it reload the files you need to do the same as before and select all your songs and go to convert id3 tags, in the window this time select a different version, for example: 2.4. When done iTunes should be able to show the lyrics if you right press a song and show info and go to the lyric tab, if you see the correct lyrics on a song you know lyricmaster found lyrics to, you should be done. 
Now you can sync your iPhone/iPod and should be able to display something like this when playing: