This is something I was wondering about as well since I have several papers which are on the brink of submission but are not quite there yet (they are already written but I am not in control of when to submit).
I was reluctant to list them since merely having papers “in preparation” does not really say that much. Anyone could write a paper, it is getting it accepted for publication which is the big accomplishment.
But at the undergraduate level, having publications to show that your research is actually making progress on important topics is a major plus. So, personally, I draw the line at the submission stage for listing papers on my CV (although I would very briefly mention papers which are in the advanced ‘in-preparation’ stage in my personal statement); it shows that you are getting results and following the proper steps in the research process even if you are not fortunate enough to have something actually published.
But then again, admissionprof’s comment would seem to indicate my reasoning is a bit too restrictive.