I think what the original poster had in mind was using an Arduino with an external time sourch (like a GPS receiver) as a self-built NTP time server for other machines on the network. Instead of using a full-blown machine, this would be a nice, quiet, reliable way to do so.
I'm thinking the same thing
. Use DCF77, or whatever you've got where you live, and GPS (for backup?) as timesources and then offer it through NTP.
Maybe hook up a lcd through I2C as well with this
(since that requires less in/outputs) for status info?