Short answer = yes.
Long answer: A paddle is effectively a 1 axis analog joystick, so *ideally* you should use a pot-based device for this. Many people use mouse devices (eg trackball/spinner) as opposed to analog sticks or paddles however. I would say that on average it works 'pretty well' - sometimes it works better than expected and other times not too good.
As for driving games, again yes it will work...perfectly (well, aside from not being a real wheel) for 360 deg wheel games like Super Sprint. For 270deg (pot-based) wheel games it will not work so well, but it will still work - generally MUCH better than using say a digital joystick anyway. A spinner would be preferred over a trackball for drivers mind you
