This was discussed in the KTI meeting on June 3, 2009. See notes here:
Since we are targeting 1.1 for compatibility, if we want to make an API change we should be doing this for the 1.1 release.
Mentioned in the KTI was that this involves more than just the service API as these sorts of things are referenced elsewhere throughout the KNS and other modules.
So, what need to be done here is some analysis on the impact of such a change and then a formal enhancement request written up that can be presented to the KTi for review.
In essence, this work will probably be to eliminate references to java.sql.Date and java.sql.Timestamp everywhere in the code (I can't, off the top of my head imagine why they would be needed). We need to verify that OJB/JPA can handle fields that are java.util.Date being mapped to the database.