I've read various threads and apparently it does work for some people.
I have a motorola droid with the FRG01B build of Android 2.2, and I cannot make a 3 way call. Total BS!
I get one person on the line, hit add call, then dial a number and hit the send/green phone icon. I get a couple seconds of dial tone, then silence. I hit the manage calls button just because it's there, and I get a busy signal, can hit it again and get back to the original call. The phone pretends like it's connected to a second line and I can hit manage calls to get back to silence and/or the busy signal. I've tested this a bunch of different times and different ways and it simply won't work.
I called Verizon and they failed miserably and then transferred me to Motorola tech support. The motorola guy asked a few questions, then put me on hold, then hung up and never called back despite having taken down my mobile #.
Apparently this was a known issue for certain regions of the country: (see the 3 way calling section on the 4th page down)
News: OTA Droid Updates coming Dec 11th
If this was known and supposed to be fixed on Dec. 11, 2009, how is it possible that it does not work with Android 2.2? I FEEL LIKE I"M TAKING CRAZY PILLS!!! AHHHH!!!
I am in Colorado and read someone else in Denver was complaining about the same problem. Must be one of the unlucky "certain regions."