with my iphone, i can only place a call with the phone itself. the green button allows me to pick up an incoming call and the red button allows me to hang up on a call. if there is no call, pressing the green button redials the last call. this has been my experience with the iphone, you might be able to do more with another phone.
edited i've since found out that you can make calls through the headunit by holding the call button down. it also allows you to do the voice commands on the iphone 3gs, ie "play songs by the beatles." oddly though, you have to be in any mode (fm/am/cd) but bluetooth to be able to do this.
Modified by xphiledan at 9:59 AM 12-24-2009