Thanks for the reply Robert. I just wanted to make sure I dont waste anymore time on FeatureLayers until I have ArcGIS Server 10 installed. Ive already spent a day on it, before reading that small piece of text in the API reference.
You do not need ArcGIS Server 10 to use the Feature Layer. A feature layer can come from either a MapServer layer (9.3 or 10) or a FeatureService layer (only 10).
For a 9.3 service the symbols from the server will not be available. This is a "10" feature and what that doc page is trying to explain.