If you are using overlay DNs on Cisco CME with an "o" to indicate "overlay", you will lose call waiting tones for the second call through the handset.
You need to use a "c" instead.
For example:
ephone 6
video
username "myuser" password 12345
mac-address 0000.1111.2222
paging-dn 1
type 7911
button 1c7,29
The line "button 1c7,29" directs calls to DN 7 and 29 to the first button on this phone, and allows for call waiting tones. The line "button 1o7,29" also directs calls for 7 and 29 to this phone, but with only a visual display.
The CME GUI seems to set it to "o" by default when picking overlay.