I've been using this feature on the iPod Touch.
It works, but under some circumstances during a cache-manifest change,
Safari will crash and will from then on always crash when loading that page,
until I reset the iPod's software.
I had what looks like the same problem on Safari 4 preview 2.
David Kilzer wrote:
This feature shipped with iPhone OS 2.1. When you use "Add to Home Screen" from the "+" button on Safari for iPhone, a web application with a manifest defined (per the HTML5 spec) will be saved with any cached resources. Note that the manifest file *must* be served with the correct MIME type for this to work.
There is no shipping version of Safari for Mac OS X or Windows that supports this feature yet.