Supplementing 041molaZHP's response above:
Firstly, we have the Parrot 3200 LS (Missus got it from London for me for Xmas/Chanukah) in a C6 Vert and we both use a Razr cell phone.
"1. How does the voice activision work? Is it sensitive and reliable enough to be useful with the top on? How about with the top off?"
We use the address book/voice activation of the Razr through the Parrot. Strangely, the Parrot actually works better than the voice activation on the Razr. Often, with the Razr, I find myself repeating the address or just giving up and dialing it.

With Parrot, I have seldom had to repeat a voice command

- but be prepared for a slight delay from giving the command and hearing it repeated by Parrot - but you'll get used to it.
With the top down, unless you are going extremely slow (read parked at a light), forget about using the Parrot - way too much noise (which merely shows how good it is at picking up noise). We have no problem with the top up. Have not tried it yet with the rear wind breaker in, windows up and top down.
"2. Can you label phone numbers with voice descriptions? If so, can the system use the voice designations from the cell phone or do you have to reenter all of them on the Parrot?"
As noted above, Parrot recognizes the Razr voice activation commands. In addtion, the 3200 can learn its own commands, however, we have not used this feature as yet.
"3. I believe it mutes the stereo when a call comes in or you decide to place a call. Can you confirm?"
See the prior post on the link to "How to Install the Parrot" - It is chock full of great info. If properly connected, it will mute the radio, CD and XM.
"4. I guess it's too much to ask to have the NAV send the phone a number of a place you want to go. This works in the Acura..."
No can do - as 041molaZHP stated, Parrot is an aftermarket system We got the Parrot primarily because of the ridiculous rates charged by On Star.

We wanted hands free ability when calling and love techie toys. We kept our On Star service and can get that luxury service of dialing reservations, etc from them and don't have to waste valuable expensive minutes on local calls.
Overall, we love the Parrot.

We plan to add one to the Missus' C5 daily driver. You have the benefit of being hands free while driving without looking the Borg began their assimilation process and decided to quit after they plugged your ear.
Enjoy