A new version of the Time of Day WP plugin has been released for Wordpress 1.5. The most important change to this release is that no plugin specific changes need to be made to your index.php file.
That is, instead of the ugly call to the time_of_day function:
you should now use the standard WP the_time function call:
<?php the_time(); ?>
This is now possible due to the addition of the WP filter hook for the_time in WP 1.5. This means plugin (de)activation/implementation is now a one click procedure from within WP plugin screen. Unfortunately, WP 1.2 users will need to continue to use the older plugin.