Yes, clicking on Cancel will cancel the flight. If the fare is refundable, CO.com will now ask you if you want to retain the funds for a future flight or refund the amount to your original method of payment.

This is actually a new feature. Used to be it would just refund the money but more recently the option to retain the funds for a future flight was implemented. Now if only CO.O.L will keep track of funds from canceled non-refundable itineraries.....still waiting for this feature CO Insider .