I'm not sure I understand your question... Is it one of ethics - how will the client know we are billing them for time we actually worked? Times and rates should be discussed and agreed upon before project is started. And in the event that it looks like it is going to take longer than originally agreed upon, I suppose it would depend on the specifics.
For instance, if we agreed on 4 hours of billable time to work on taxes and after starting the project I realized it was a little more in depth than I originally thought and it was going to take me another hour or so...I may just do it at no extra charge and let the client know what happened so we can both be prepared in the future. However, if it turned out the job was way more extensive than I thought, I would call the client and explain the situation and find out if they wanted me to continue on at the same hourly rate.
As for the question on Excel or other software for time tracking - I love Excel and I think it is so easy to change as my business grows and changes that it is generally what I use. However, I love spiffy little programs that have exactly what I need in them and are really functional - so I am always on the look out for something.
Please let us know what you decide to go with. New ideas are always so welcome, whether you have been a VA for 10 years or 10 days!
Good luck!