Putting this one in caps, as it is a potentially major theme on this discussion board.

It would be fantastic if all my favourites could be downloaded onto the iPhone, so that I could view, edit and maintain the individual text file for each song off-line.

I don't always have an Internet connection. A lot of people don't. Guitar people like going out to the woods and fields or travelling around India where there is no WiFi. Or jamming in basements where there is no signal. They don't all have an unlimited bandwidth data plan.

Check out the MySongBook iPhone app. It does this. But it is limited in so many ways that it is practically unusable. and it doesn't store text files. You don't get to edit.

This would be a radical change. It would change the task the app performs. it is not a bell or a whistle or a feature or an improvement. It would result in a new product. And a very useful one at that!

If it could store all my favourite songs in some folder on the iPhone, in subfolders by artist, that would be so useful to me!

So guys, if you are looking at implementing this, please don't pack it into some obscure database, the way mySongBook has done -- if you can leave it as text files, then the user can edit their collection to their own liking.
You will be able to synch your website's and app's Favorites very soon, it's planned for one of the nearest releases.