That said, I think there's an android app I saw recently on the market that does this. I'll install it later and see how closely it compares to the features mentioned.
However, I wouldn't be surprised if there is money to be made with an application that helps users their spend money. You could try to sell it to a phone company, or a supermarket. You could let supermarkets advertise discounted products. You could make people pay for the application, or for 100 updates to the list. If users update the list per sms, maybe you can share the revenue with the phone company.
I suppose the biggest problem is not the monetization but the distribution. This is solved for the iphone, and for android phones, but for other phones it looks like a nightmare.
Another problem is to make easy enough to use that it actually makes life more simple. I find typing on a phone cumbersome. Maybe using a dictionary of the items you have bought previously would make it easy enough. It could be nice to be able to take a picture of a product's barcode to add the item in the list. On the other hand every added functionality diminishes the ease of use.
The main inconvenience I have with my shopping list on paper is that the things I forget to buy are not automatically on next week's shopping list. And I might forget less things if I could easily delete the items I buy while I'm in the supermarket. This sounds like a small easy-to-write application.
The application should also have the advantages of my paper shopping list. My wife should be able to add things to the list using her phone. Adding items to the list should be extremely easy. I hate writing text messages.