Not a big fan of time outs, myself.
Also, not a big fan of punishment... and not a big fan of the focus on "naughtyness".
I am a big fan of teaching, -detailed- -practiced- -teaching- on the right thing to do, catching kids doing the right thing (lots of praise and High Fives), and quick apologies when we step on someones toes.
Sometimes just a quick step back from a fight and a blurted out... "Oops, I'm sorry for "whatever"" is enough of a repentance. I'm a big fan of getting passed the bad times quickly and moving on to practice doing the good and right thing for the majority of the day.
But, when consequences are unavoidable this is what I think:
I am a big fan of taking problematic toys away. Of walking away from tantrums. Of sending children to their beds to "calm down" on thier own.
A "calm down" can be because of yelling in the house, jumping off couches, hitting, running about so crazy that the kids keep getting hurt and crying too much, etc. Also, for me, toys are acceptable during calm downs. Music toys such as hand held pianos, pressing sound buttons, leap frog books, View Master slides, coloring, or just weeping into the pillow are all perfectly OK calm down devices.
I only use a time out (either a split-second timeout or a two minute time out) when I can't do the other option or when it's just one of those challenging days where that's all we seem to do is just cry in our pillows, sit in time out chairs, lay on the carpet and kick our feet, and yell in the house a lot. Those days seem like a total failure. But, honestly, they do pass and they are not the majority of the time.
Just keep in mind that the consequence should match the crime. If the problem is actually being "too riled up" than the solution should be learning how to calm ones self down. Wasn't that the original purpose of the whole time out trend anyways? To take time out for calming down.