At least now they work, but their impact is still very limited for land warfare at least. For normal setups they only affect the outcome at all when your outgunned pretty badly if I understand things correctly.
My understanding is a bit more complicated than that, but basically, every unit of toughness or defensiveness has an 80% chance to stop one unit of HA or SA (depending on which is being used for the current attack). But it gets weirder because once a unit runs out of defensiveness or toughness in a combat round, every additional shot fired at the unit still has a 60% chance to miss (according the wiki and its relevant forum threads). But once a shot hits, it does X damage (and that damage is not mitigated in any way, I don't think). Then there are reductions in values from units being understrength which are not well understood...
But because of how damage is inflicted, ORG is really important. A higher base ORG will increase the speed with which it regenerates (on top of morale techs). It will also give the unit more staying power in a fight. While defensiveness and toughness have a place, I think ORG is much more important in the big scheme of things AND it is easier to increase. (Officer ratio, doctrines that cost zero IC and that apply instantly)
Special forces generally have higher ORG at the same tech levels as regular INF, just like regular INF has higher ORG at the same techs compared to MIL. But each of these base units with higher ORG generally cost more officers as well, making that additional ORG come at a price. In fact, the additional officer cost of special forces in (FtM) is more than the ORG increase for the unit itself, meaning that you get ORG cheaper from MIL than INF or special forces (the reduced officer cost makes it easier to get to 140% officers, meaning you get more ORG for fewer officers...). Now, someone with nice math skills could compute the combined effect of toughness, defensiveness, ORG, and terrain bonuses to determine whether special forces are worth it in a particular situation.
But all of that is a sideshow to the advantage of TDs when attached to MOT or MECH. The CA bonus, especially with the right leaders and doctrines, coupled with the speed potential of MOT/TD or MECH/TD divisions, means that even if TDs had stupid stats, the division they help create is really nice. Of course, these divisions require lots of logistical support, meaning that they can't function in all theaters with equal quality.