Do they work on our phones? Every time I get a group text from one of my iphone friends its never clear who its to, who is in the group and if I'm responding to the group or just to one person. I think I've noticed this with several different texting apps.
The stock messaging app doesn't always make it clear who else is in the group just by looking (though if you tap the menu control on the top right, there is a menu "show participants", that will list all of the people in the group.) Hangouts has the same deal, though if you hold the phone landscape, it's easier to see who else is in the group.
But, yes, I have several group conversations with iPhone users (both of my kids have iPhones, and all three of my siblings), and you can definitely have group conversations with iPhone users.
In the stock messaging app, you have to go into settings and make sure that "group messaging" is turned on under "Multimedia (MMS) Messages". I believe that it is by default. (Well, there is a similar setting in Hangouts under settings->SMS.) You can choose the default texting app in settings->more (under Wireless & networks)->Default SMS app.