Looks like people have pretty well answered the question with a lot of helpful info. I just thought I'd add the experience I had when I actually told a prospective employer about my diabetes in an interview.
I'm still in college, and last semester was looking for a job that would get me some office experience. Since I don't have much previous experience, and this is a small town with loads of college kids, I had a hard time even finding a listing. Finally, I landed an interview. When asked the "is there anything else I should know" question, I answered that I have type 1 diabetes, which I doubted would be a problem that would effect my work. The interview had been going well up until then, I thought. However, after that it took an unsettling turn. The employer was a former nurse whose ex-husband is diabetic. She told me all about him, that he had poor control and suffered a lot of serious lows. This led her to essentially accuse me of being incapable of taking care of myself, or of performing a job answering phones and sending faxes.
She said that if I were to be employed at her company, I would have to test my blood sugar in front of her. This made me uncomfortable, especially since her manner was condescending. Timidly, I said that sounded a little extreme. I had told her earlier in the interview that I plan to take a paralegal certification after graduating; now following my minor reluctance to let her micromanage my disease, she said that if I thought she was pushy, then I wouldn't be able to work for a lawyer.
I wasn't sure if it was appropriate or even legal for her to make those demands, let alone to insult my trustworthiness. A friend has since mentioned to me that it's illegal for an employer to tell a pregnant employee what to eat, so it should be illegal for an employer to treat me in a a similar manner.
Suffice to say, the little remainder of the interview went poorly, as I was nervous and upset. I didn't get the job, supposedly because other candidates had more experience. I can't say I'm sorry not to be working for that person. I don't know if I would have landed the job had not the whole diabetes lecture happened. It seems that had she found out later, she might have been even more overbearing and demanding.
In the future, I won't be mentioning my disease in interviews. I don't see it as a total liability, since I find that when I tell people I'm diabetic it can function both as an ice breaker and litmus test. But I've learned now that it's also important to set professional boundaries.