I think what distinguishes a great songwriter from an average one is the ability to place yourself in a situation that your not in,or may never be in,and write about as though you were. I've always thought that a good song writer makes a great liar. I know if I only wrote about myself or people I know then my songs would get boring quickly.
Getting back to the topic,I've never sat around and listened to peoples conversations but I think thats something I need to try. Alot of my song ideas come to me right as im starting to fall asleep. There have been nights where everytime I start to drift off I have a line or idea popping in my head. Needless to say I dont get much sleep!
kev