I found this on one of the Touch forums and tried it out. This downloads and stores the lyrics to the music you are listening to in iTunes on your phone or Touch automatically. It keeps them in a database on the phone, so if you launch it while a song is playing that is stored, it automatically switches to those lyrics, otherwise it will try to find them. Coolness.
http://code.google.com/p/lyrics-app/
It's in Japanese, but it didn't take much effort to translate, as the Keys were all in English.
Just go into the Japanese.lproj folder and open up the Localizable.strings file, replace the Japanese strings with the same text as the key name (which are in English). Or you can just replace the file with the one I attached (unzip it first).
Now it will still flash Japanese on startup, because the Default.png is that way. Replace it with the image I've attached and you're good to go.
To use this efficiently, start up your music before launching the program. Double-click the Home button to bring up the iPod controller. After it finds the lyrics (or fails), just click the forward button to go to the next song. I was able to go through my songs very quickly this way.