I just came across an impressive–and free!–timekeeping and billing utility, FreshBooks. I gave FreshBooks a test run, and it is pretty smooth. It includes a timer for timing tasks, which is a wonderful feature. And it generates nice invoices that your clients can access online, another nice touch.
The only downside, as with all web apps, is that you must be connected to the internet to use FreshBooks. This is not a big deal for most, though, and a big advantage for many.
Check it out.