As is usual, whenever you wonder about a rumor, the first place to check is snopes.com
As it turns out, the answer to your question is "no" with a big caveat of "there's a real good reason to the rumor".
One one hand, C-3PO costume - as evidenced from any screenshot, like the one from Wikipedia - merely had a codpiece.
I have a suspicion that the Wiki image may be a drawing and not a screenshot, on the account of white background, so here's an actual movie screenshot:
However, that rumor does, indeed, have an actual true story underlying it.
As per snopes, a Topps trading card of 3-CPO was once released showing what looked like - for all intents and purposes - the "male bits", as you worded it (I will not include the images here but the article has them. It's quite unmistakable).
According to Topps (who examined the original photo) it was NOT "photoshopped in", but was merely a freak accident of a piece of the costume falling off and being positioned at just the right time in just the wrong place when the photo was taken.
How the offending picture made it onto a trade card is hard to tell, but hey, they DID launch a NASA Mars vehicle with a crashing bug caused by metric-imperial unit mismatch. The quality control for trading cards is likely quite a bit laxer.