As far as i can understand things; yes, surpressors work just as expected, making the bang go pfft.
A silenced bullet that kills a runner for instance, will not alert the other runners in the pack, unless theyre really close to the destroyed enemy.
Firing a single long-range bullet from a silenced rifle may not give away your position if your target isnt insta-killed, but firing a bunch of them bullets will give away your location.
And it appears as if one enemy spots you, your presence is instantly known by all other enemies in that particular group.
I have shot silenced long-range rifle rounds at a single tank, taking out its main armaments without him detecting me by waiting between shots (until his yellow attention-light goes white), so it IS possible to take out even heavy enemies with a silenced weapon without anyone noticing you.
I havent noticed any negative effects of using suppressors (like velocity, damage and such), the trajectory seems to be identical (you hit the same spot regardless), so my guess is that it only affects sound.