BuzCranne from macrumors.com about 2.3.2 [AppStore]:

I've been thinking about getting one of those watches, so I figured it was worth $10 to give this a shot. Too early to tell a whole lot, but here's how it went last night:
I used a cut sock around my forearm to hold the iPhone. Actually not uncomfortable at all, which surprised me. It does seem like a ridiculous habit, but we'll see.
No problems with accidentally pressing the Home button in my sleep. I can't see any way I'd really damage the phone either.
It burned about 50% of my battery during 8 hours. Airplane mode on, brightness all the way down, first gen iPhone 16 months old.
It was set to wake me up between 6:30 and 7:00. It went off at 6:31. It did feel like the "right" time to wake up. I didn't have to force myself to get out of bed and I wasn't too tempted to hit snooze.