The lyrics idea was good, but it's unrefined. Three of my biggest problems:
1) If you idle your nano too long, it switches back to the original Now Playing screen. This is annoying, because you have to keep scrolling every few seconds to make sure it doesn't "snap back." (If anyone knows how to remedy this, I'd be very very appreciative.)
2) Adding lyrics to all your music is very annoying, and definately not fun at all. Even if you use an applescript, such as PearLyrics, you'll get spelling errors and lyrics for the wrong songs.
3) The lyrics don't look very good on the ipod anyways. You can't see in iTunes how the text wraps. If you could, then you can insert a return here and there to where you want your "stanzas." As it is, I keep the phrases as short as possible, so I don't get ugly wrapping.
I'd like to have problems 1 and 3 addressed. #3 shouldn't be too hard, and #1 is a very important fix. Not sure how'd they address #2, but having lyrics on your ipod probably won't catch on for people with 10,000+ songs. Spending days to type in lyrics is not a good idea, but having incorrect lyrics is pretty dumb, too.