Yes it works fine with overclocking, I have my SD3700+ 2.2ghz set where it throttles down to 1.55ghz/1.1v when at idle, and up to 2.8ghz/1.45v under load.
If you let windows do the throttling it sucks, if you use a program like RMclock from rightmark it works very well.
The only problem I've seen is that with C n Q enabled it limits the max bootable HTT.
In my case with it enabled my max HTT is 256-257, with it disabled I can boot to 320+.
This wasn't a problem for me because with the 3700's 11x multi I can still get my max overclock of 2.8ghz with 11x255. But for people with 3000's or 3200's that overclock well not being able to use a high HTT would probably knock 200-400mhz off their max overclock