Think it depends on the make and model of the phone if the default player supports lyrics or not. My Lenovo's music player supports lyrics. I'm sure there's other players that can do this besides PowerAmp though.
the usual method of having songs with lyrics, is to have .LRC files in the same folder as the songs. .LRC files contain the lyrics and timing info for showing and highlighting the lyrics in time with the song, i.e. karaoke style.