Add lyrics to your songs and display them in iPod Touch. I discovered this by accident, while updating the album covers of my collection. To add song lyrics, go to iTunes. Click a song and then press Command-i (get info). Click the "Lyrics" tab and paste the song lyrics there. Sync with your iPod Touch.
Now listen to the song in iPod Touch. While the song is playing, tap the screen. The lyrics will now be displayed in scrollable format.
I get my song lyrics by browsing on the web and copy-pasting.