Chilli X has just the answer for you: PhotoFrame. The US$0.99 app displays six pictures from your photo library as a slideshow while your iPhone or iPod touch is docked, with a nice clock / calendar displayed at the bottom of each photo.
Controls allow users to select a 12 or 24 hour time display, and the app overrides your auto-lock setting so that it can show off your photos as long as you want. If you're impatient and want to see the next photo immediately, you can tap the picture or shake the iPhone or iPod touch.
If you're not using PhotoFrame (click opens iTunes) to keep your device occupied during those times you're sleeping or otherwise engaged, what is your favorite "downtime app?" Leave a comment below to keep the rest of us informed.
Thanks to Aidan for the tip!