czar
The Browser->On back button pressed works for me on both a Samsung Ace (Android 2.3) and Samsung Galaxy Tab 3 (Android 4.1) with a game wrapped using PhoneGap, so I'm not sure why it's not working for you.
The manual also suggests it should work.
On back button
Triggered when the user presses the device's 'Back' button. Note not all devices have this button (e.g. iOS devices only have a 'Home' button) and not all platforms support this trigger.
What actions are you trying to execute when the button is pressed? Maybe they are the bit that's not working. You could try just changing text on screen to test it.
It could also be an issue with whatever wrapper you are using, some things don't always work with some wrappers.