Is menu function in English?

Meaning to say when I see ATM machines at Post Office / 7-Eleven / Citibank, they should accept foreign cards, right?

But I still don't know if these machines have English functions? I cannot read Japanese.

Even many regular Japanese bank ATMs have english translations (but do not work with international cards).

When I am at cafe, department stores, drug store, I can use cards instead of cash.

Not all cafes, and drug stores take credit cards. While many places are more and more accepting of cards, there are still many many places that do not accept cards. Japan is still primarily based, so it is still good to have some cash with you.

Don't forget your daily withdraw limits, (check with your bank), I had to pull out a large sum once, but was limited by my daily withdraw limit, had to call back to the USA (time difference) and take care of it. So check before you leave.

Department stores do take cards, most hotels as well.
However cafe's generally do not, nor do many fast food places etc (not like back home in the US where everywhere you can use cards).
Regular train ticketing machines take cash only as well.

japan is such a safe country I would also advise to take cash with you, and use credit cards when you can.

Also is there any problem using foreign debit cards in restaurants/hotels where they do take card?

If you enter 20,000 and then press the yen button (‰~) you will get 20,000 yen. If you enter 2 and press the man button (–œ) you will also get 20,000 yen. Just be sure to hit the correct multiplier button. Other than that the link Monkey See posted explains the process fine.