We haven't implemented search for Digg Reader yet. We're working hard to get the infrastructure in place to support search. So stay tuned.
It turns out that search is exponentially more complex, more computing-intensive, and therefore more expensive, than any other part of a reader. And it tends to be highly important only to a small fraction of users, if Google Reader's experience is any indication. So we prioritized other elements of the Digg Reader first. We're definitely going to build it, but it's not yet in place.