I used to claim that I 'Can't learn lyrics' and I used to work from a book (a ring-binder actually), but I realised after a while that:-

1) It's difficult enough to multitask with two elements - playing and singing. Adding a third element - reading - made it all too much like bloody hard work.

2) Making eye-contact with the audience, a very important part of performing IMHO, is impossible while your eyes are fixed on words from a book.

3) In subdued light, reading becomes very difficult.

So I started to record myself 'doing' the song, put it on a CD, play it in the car, singing along to it over and over. EUREKA! I remembered the lyrics after maybe a dozen runs through the song.

So now, until a song is engraved indelibly on my memory, I have a cue-card, like others have mentioned, with first lines of verses. Once it's stored in memory, I put the cards away.

I do believe it's made me a better and more confident performer.

But I don't object to others reading the words (except those who still stumble over the words even when reading them, or those who 'do' the same three or four 60's pop songs every time, and still have to read the words).