function_exists will return false for functions disabled with the disable_functions ini directive. However those functions are still declared so trying to define them yourself will fail.
<?php
if(!function_exists('readfile')){
function readfile($file){
$handle=@fopen($cache,"r");
echo @fread($handle,filesize($file));
@fclose($handle);
}
}
?>
The above will issue a "Cannot redeclare readfile()" fatal error if readfile was disabled with disable_functions.