My songs "weren't" grayed out. They were completely missing from my iPhone 4S. I use the word "weren't" because I'm now back to normal.
I had lost my music on my iPhone 4S after updating to iOS 5.0.1. A call was placed to tech support yesterday (11-22-11). Several options were tried before I was passed on to a "senior tech advisor". Several other options were tried before it was decided that in my case a "full restore as a new device" was needed. The key here is to make sure you restore it as a "new device". It worked! Everything is back to as it should be. I also had an iPod Touch that had experienced the same problem after updating to iOS 5.0.1. The same solution was used for it as well. My entire music library is back to normal on both devices!
The strange thing is that I had updated my iPad 2 on the same day as updating my iPod Touch & my iPhone 4S & it doesn't have the problem. My music library is just fine on the iPad. The tech & I discussed all the apparent issues with this problem & we are in agreement that the problem seems to be a bug/glitch in iOS 5.
Some devices are affected & others aren't. Some fixes of one kind will work for some, some won't.
Be prepared for the time consuming task if you are forced to take this route - especially if you have a large music library. In my case that consisted of over 5,000 songs & videos. You will also have to restore your other items such as contacts, calendars, bookmarks, notes, WiFi settings, etc.
I can't stress this enough - back up your deivce before starting a restore!
For all the needed details, please see this link: http://support.apple.com/kb/HT4137?viewlocale=en_US
Please be aware that some Apple techs do read these discussion boards. My tech stated that she makes a point of checking what is happening to customers, as well as what issues seem to be causing a lot of posts. She further stated that Apple does want people to contact directly with their problems. "We can't fix a problem if we aren't aware of what our customers are experiencing." She related some of the fixes that were being addressed on this very issue of music library problems to me, which I myself had seen. This told me that she indeed was accessing the discussion boards.
Hope this helps some of you.