New with Confluence 3.2 upgrade:
To map a Confluence WebDAV client web folder in Windows XP use ' My Networdk Places' not 'My Computer'.
http://confluence.atlassian.com/display/DOC/Using+a+WebDAV+Client+to+Work+with+Pages
With the February 13, 2010 move to new hardware and an updated Confluence software install the WebDAV plugin is now functional. Use Confluence like a network drive with drag and drop file operations. WebDav client setup instructions can be found here.