It should. "In live view photography, the focus area for autofocus is shown in the monitor and can be positioned using the multi selector. AF-area mode controls how the focus area is selected. The AF-area modes available in live view include wide- and normal-area AF, subject-tracking AF, and face-priority AF. AF-area mode selection is also available during movie recording". Source: http://imaging.nikon.com/history/basics/16/02_1.htm
>Ah - for some reason it works when I use the AF-ON button on >the back of the camera but not when I use the shutter button. >Do you know why that is?
It depends on the camera. On the earlier cameras with Liveview, if you are in Tripod mode, focus is accomplished using the AF On button. That's how it works on my D3X and D700. The newer cameras allow focusing with the shutter release.