I can't help you with much as I am just beginning learning to use arduino, (I'm working on a project with the lilypad mp3 as well), however I have come across how to use multiple buttons on one input. Here are 2 links that I have found describing this. In a nutshell, you use an analog input pin and resistors so when a button is pressed a specific value is read.
The instructable is a basic 5 buttons on one input example. http://www.instructables.com/id/How-to-access-5-buttons-through-1-Arduino-input/?ALLSTEPS
The forum posting is more advanced, and explains how to implement 6 buttons and be able to use 2 button combinations (21 unique values)http://forum.arduino.cc/index.php/topic,8558.0.html