I have used it successfully on the 2.0.6 version with the exception of attachments. Since I wanted to send e-mails from my Smartphone with pictures attached, and the built-in mail handler wouldn’t post them, I ended up using a plug-in called Postie. However, I have avoided upgrading to the latest version because Postie is broken in 2.1.x, from what I had read previously, but now that I have gone to the Postie web site again, I see there is a WP2.1.x capable version available.
When it worked under WP2.0.6, I don’t believe I did anything special - just properly filled in the blanks with my “secret” account name, mail server and password, but I think maybe WP-Cron had to be activated in the plug-ins also, so that WP would actually check the account.
A couple of other points - the e-mail you are trying to send to your blog should be in plain text format, not HTML or other formats. Also, any unusual characters in the subject line (anything other than letters and numbers) tend to muck things up.
We don’t need no stinkin’ signature…