I have the duct work running in my attic. Does the cold air return need to be insulated to keep from having condensation from accumulating and ruining the ceiling? Right now, there is a layer of insulation on top of the duct work, but not on the sides...

All duct in unconditioned spaces should be insulated. Crawl/attic/etc.

And the more the better. Your house is only insulated as well as your ducts in unconditioned spaces are. That goes for supplies and returns. I still can't figure out why codes (in this area) require R39 in attic cap insulation but will pass R8.6 (1-1/2" fiberglas board) ducts in the same space.

Remember, that return air is being heated and cooled by the ambient temp and must be reheated or cooled. Insulating the duct work will save you money.