Found a great app called Radio Rip: Radio RIP - Android app from Spartacus Rex | Appolicious Android App Directory
It allows you to record up to 4 internet radio streams. It separates the songs out or tags them. Then you can go into your recordings and store the songs on your phone's SD card. Then you can transfer them to your computer and/or iPod. Good way to beef up your music library.
One drawback is that they don't have a lot of "mainstream" radio station choices to record but you can manually add your favorite station as long as it streams in mp3. I've found plenty of choices at Free Internet Radio - SHOUTcast Radio - Thousands of Free Online Radio Stations You can find the streaming URL by right clicking the stream of your choice, Save Target As, then saving it as a Document. Once in Documents, right click on the item, open it w/ Notepad. Then you can find the URL which starts w/ http:// and then ususally a bunch of #'s following it.
If you want good quality recordings, I always use the 128 bitrate streams.