How do you turn Three Finger Drag on? I'm trying to use the new "three finger drag" gesture in Lion and it's not working. There isn't a preference setting for it in TrackPad -> Point and Click either. Does anyone know how to turn it on?
Some older Macs only support two finger scrolling on the trackpad, not three. Since you're not seeing a setting for three finger drag, I'd guess your hardware just doesn't support it.

Are you able to do other gestures that require more than two fingers? If not, it's probably a hardware limitation, and you could just get a Magic Trackpad.