I saw those too. They have a few now with an analog compass hand as well.
They should work about as well as any electronic compass.
I had one of the older digital ones that only gave you a reading when you pressed a button. Apparently the new ones run for 20 seconds at a time (at least the analog one does - anyone know about the newer digitals?), allowing you to 'track' the needle while you figure out your heading.
http://www.timex.com/compass/
and if you just want a quick estimate and you always wear an analog watch anyway:
http://www.time4watches.com/Watch Articles/using_a_watch_as_a_compass.htm
I've had far too many timex watches fail on me though (crown breaks, alarm stops working, indiglo dies...) so I'm apprehensive about getting another, though these new compass ones are tempting.
Edit: The manuals claim +/- 10 degrees, which they should be capable of. I never tested my old one to that precison though. I'd be interested in the following:
1. Calibrate the watch as per the instructions.
2. Set the watch level on a (non-metallic) surface. Take a reading.
3. Wait for a minute and press the button to take another.
4. If you get the same answer, then pick up the watch and walk around with it, setting it down in the same place at the same orientation.
5. Press the button and take another reading.
6. Repeat the tests, rotating 90 degrees.
If all the readings are correct, and it matches a bubble compass, then it should be good enough to be usable (even though you may need to calibrate it in the field).
As a final test, you could set the watch on a protractor (which is taped to the surface) and align 0 to 0. Then take readings while moving the watch at 5 or 10 degree increments in a circle. This should give you an idea of how precise it is.
Hmm, I may have to get one...