Phoebe regularly plays guitar in Central Perk.
Phoebe's guitar is used frequently by her during the whole course of the show. The most famous song she plays is "Smelly Cat". See also her songs. She did a music video (although the producers used another singer).
Phoebe also taught Joey how to play guitar using hers in "The One With All The Resolutions" (S5E11).
The guitar case is lined with orange felt.