Phoebe experiences the same sexual desire for her that the men did.
That was, that was just friends getting together.
To protect Rachel, Phoebe claims that she is pregnant and she said Monica was pregnant because she wasn't ready to tell.
She is very open to the existence of paranormal phenomena and willing to consider the most bizarre pseudo-scientific theories, much to Ross' confusion and despair.
At the end of the episode she teaches a character played by guest star to play the song.
While Rachel is in labor, Phoebe meets a cute with a broken leg.