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Apparently motorola disabled call recording on the droid. Several people have tried writing apps, but failed.
I believe it would work on other android phones, but may only work by recording through the mic, while the call is on speakerphone. A serious oversight by android developers, if you ask me. I am considering switching back to my old Palm for this basic feature.
Check out vRecord and AllCallRecorder in the market.
I'm not sure if this works across all Android devices, but I just use the stock Voice Recorder app that comes on the phone. Either start it before the call starts, or navigate there and start it anytime during the call.