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I'm pretty sure most any DC can play CD-Rs, you really should of taken advantage of the SEARCH feature, conviently located at the top of this forum before posting this redundant question, though.
As for the "rumor" it was not a rumor, Sega did hire out a company to build a Dreamcast incapable of reading CD-Rs and CD-RWs. Unfortunately the company went bankrupt, back in January, and while Sega was hunting for another company to continue that work, they too gave up on the Dreamcast, back in March I think it was.
~The Masked M0M0~
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