To switch between timer mode and stopwatch mode you sweep your finger over either right or left.

You can use both mp3s and Wav-files as alarm sounds, but it is advisable to use short clips, since there currently is no way to stop a started alarm. (This means that a played song for example wont stop play until either the program is exited or the song is ended.) I am currently working on this.

For WVGA users, please download this software here (417 KB) or its mirror here.

Update Description:
v2.0:
- VGA and WVGA versions available.
- Timer function.
- Changeable timer alarm with vibrate alert.
- Ability to use the D-pad instead of the screen.
- Two ways to display split times, one as in V1 and one with focus on individual lap times as requested.
- The stopwatch and the timer both runs perfectly well when the phone goes to sleep or when you hit the power button to turn the screen off, compared to V1 where it didn't.

v1.0.1:
- QVGA and VGA versions available.
- That small "closing app"-bug corrected.

v1.0:
- Only for VGA-screens!

SOURCE

http://forum.xda-developers.com/showthread.php?t=421812

Reviews:

***** [Apr 2, 2009] by Dave using HTC Touch Cruise
Beautiful stop watch! One of the best. Works smoothly and so aesthetic. This is how apps should be made for the modern ppc device. My phone is QVGA and I think Emilio downloaded the wrong version, because on my device the app is perfect. Only one small thing: digits look a little "jagged".

* [Mar 21, 2009] by Emilio Le Roux using HTC TOUCH 3452
I downloaded the setup cab (2.0) but it seems it's for VGA only. Unusable in my device.

* [Feb 10, 2009] by Ulf using HTC Touch Diamond
Great app with one flaw that makes it almost useless. It stops counting time about 30s after going to sleep mode.

***** [Jan 22, 2009] by Tim using HTC Touch Pro
Really nice program. Works flawlessly and looks great. Fits very well with the TouchFlo 3D interface. I only request that you add the option to turn on/off haptic feedback. Otherwise, perfect...