This song was used in the kiddie classes to teach that God is their "FRIEND." That sort of bugged me on two different levels. (1) They were teaching "birthday party" friendship, not "got your back" friendship - and God's friendship is closer to the latter, [cf John 15:13] and (2) the lyrics are "I am a friend of God," and not "God is a friend of me," which is what they were telling the kids. True, friendship is often a two-way street, but that distinction is important if you are going to really understand the lyrics.
If "I am a friend of God," then I am obedient to what God asks of me. John 15:14 says, "You are my friends if you do what I command you." (ESV) And it is obedience from the heart of loving friend, not as a duty of a servant.