I actually installed Jays Headset App on my phone and as a result the 1-Button cable V-Moda sent me works, even if its the wrong cable. I did email V-Moda about the incorrect product and they sent me out a replacement which should be here sometime in the next few weeks.
And no, the middle button of the 3-Button cable does not work even with Jays app. Occasionally my phone will pick up that cable as a headset cable and the middle button will work but thats about 1/50. I believe I am getting an iPod for Christmas though so the cable will still have some use.