Do they have the Pirates in the Caribbean deck party on the 3 night cruise? If so, which night is it and do most people dress up? Thanks!:)

Yes.
It is the second night of your cruise -- during the day you are in Nassau.

When we went in Feb of 06, they did. I know it was not the first night for sure but cant recall on which of the other two nights it was. (ETA: Looks like Niwel knew... :) )

Some people were still "dressed up" from dinner a little bit, and some people had some pirate garb, but not many.

We just got back from our first DCL trip-the Feb 14 three night. The Pirate Deck Party was really a highlight--even though it started late for the kids, they had a tremendous time. There were a fair number of people dressed up--mostly kids. Some adults had bandanas or a pirate hat and a piratey t-shirt...except for one couple, who were standing near DS and I. When I first saw them, I assumed that they were cast members, because they were in full-on, breeches, boots, sashes, and accessories, pirate gear. As I recall, the gentleman of the two had impressive, Johnny Depp style eyeliner as well, and the lady was displaying a rather un-Disney amount of decollatage....it was quite a good time....

Some people are dressed up, but mostly people are wearing the bandanas that Disney supplies at dinner (you can also pick up free pirate tatoos at the DVC desk on deck 4).

The Pirate Party is also probably the only time you'll ever see Minnie Mouse getting her groove on to the tune of "Sin Wagon". :eek:

So I'm confused...If my dinner rotation is at AP that night , will it be pirate themed food?

From what I recall, no. It was its usual, standard menu.