A few days ago several reports surfaced that Amazon had quietly upgraded the functionality of its cloud player, and now all iOS devices could use it.
I have been playing with it for a while. It streams about the same over 3G as it does over wifi, for me. There is a small lag time between tracks, but nothing you can’t handle. As the article linked above says, the controls are not designed for a small screen, so iPod/iPhone users will be scrolling a bit. You can see and use your playlists, at least the ones on top of you list of playlists (since I cannot get mine to scroll down).
This isn’t anywhere as nice as an app, or even a web app, would be. But it’s a start. As a result, i took most of my music off my 16GB phone to make room for apps and video. If need to hear a certain song that isn’t loaded, I can just use the cloud player. How long will it be before there is a reall app for this? I’ll bet people are working on it right now.