[3/17] SmartLyrics (can auto look up song lyrics, also has Manual Search)
 

It can automatically retrieve the lyrics for the selected song in WMP or AudioManager, assuming you have your songs labeled correctly. You can even manually search for songs, even ones not in your library. (Data connection required)

To use this app, select the song, then just run the app. It will pull up the lyrics in an IE browser.

http://img18.imageshack.us/img18/2929/screenshot2i.png

Taken from the xda thread