I can only confirm that it works with the WDTV Live Streaming media player, which I own.
Depending on the DNS-320's firmware version you are running, the UPnP server might display filenames in random order (not alphabetical order). This issue was corrected in firmware version 2.02.
Maybe it's not an issue for you, but the DNS-320's UPnP server does not support subtitles. In fact, no UPnP server support subtitles, as far as I know.
Thus, I prefer to stream files from network shares.