This is now (almost) documented and can be seen here:

http://cvs.php.net/co.php/phpdoc/en/reference/var/functions/is-callable.xml

It's currently commented out as I'm not comfortable with these docs or this topic.  Please provide some more feedback :)

OK, here's some additional information about the function that should be enough for writing documentation.

When the second argument is true, the function only checks that the value passed for the first argument follows the correct format.  That is, it's either a string or an array with two elements.  If an array, a check is made that the first element is a string or an object and the second element is a string.  In this mode, no check is made for the existence of the function.

The third argument receives a description of the function meant for the user to read.  The description isn't implying anything about a method being callable statically.  (In fact, on this point, this might be my own imagination and not something anyone else would guess.)

Here's a reasonable example of use.

<?
    function callIfPossible($f)
    {
        if(is_callable($f, FALSE, $callName))
        {
            call_user_func($f);
        }
        else
        {
            print("Unable to call $callName<br>");
        }
    }

    function a()
    {
        print('function a<br>');
    }

    class c
    {
        function m()
        {
            print('method m<br>');
        }
    }


    callIfPossible('a');
    callIfPossible('b');
    callIfPossible(array('c', 'm'));
    callIfPossible(array('d', 'm'));
?>

Someone documented this a couple weeks ago, it'll show up when the manual is next built.