When I was running Android 1.5 on my Sprint HTC Hero I had it set to the automatic brightness setting. After I updated my handset to Android 2.1 I had forgotten for a couple of months to set it back to automatic brightness. It was on automatic brightness by default in Android 1.5, so I am not sure why they changed it for Android 2.1. Anyway, a couple of weeks ago I set it back to automatic brightness.
I noticed a fairly nice bump in battery life after doing so. I mean, my battery life was already quite good with Android 2.1, but I was not going to complain about even more battery life.