The precision and discovery potential of a neutrino factory based on muon storage rings is studied. For three-family neutrino oscillations, we analyse how to measure or severely constraint the angle $\theta_{13}$, CP violation, MSW effects and the sign of the atmospheric mass difference $\Delta m^2_{23}$. We present a simple analytical formula for the oscillation probabilities in matter, with all neutrino mass differences non-vanishing, which clarifies the subtleties involved in disentangling the unknown parameters. The appearance of ``wrong-sign muons'' at three reference baselines is considered: 732 km, 3500 km, and 7332 km. We exploit the dependence of the signal on the neutrino energy, and include as well realistic background estimation...