diff -urN orig/calendar-view-ical.tpl.php fixed/calendar-view-ical.tpl.php
--- orig/calendar-view-ical.tpl.php	2011-03-13 23:05:19.000000000 -0500
+++ fixed/calendar-view-ical.tpl.php	2011-05-27 06:34:36.000000000 -0500
@@ -33,10 +33,18 @@
 UID:<?php print($event['uid'] . "\r\n") ?>
 SUMMARY:<?php print($event['summary'] . "\r\n") ?>
 DTSTAMP:<?php print($current_date . "Z\r\n") ?>
+<?php if (!strpos( $event['start'],'T')): ?>
+DTSTART;VALUE=DATE:<?php print($event['start'] . "\r\n") ?>
+<?php else: ?>
 DTSTART:<?php print($event['start'] . "Z\r\n") ?>
+<?php endif; ?>
 <?php if (!empty($event['end'])): ?>
+<?php if (!strpos( $event['end'],'T')): ?>
+DTEND;VALUE=DATE:<?php print( $event['end'] . "\r\n") ?>
+<?php else: ?>
 DTEND:<?php print($event['end'] . "Z\r\n") ?>
 <?php endif; ?>
+<?php endif; ?>
 <?php if (!empty($event['rrule'])) : ?>
 <?php print($event['rrule'] . "\r\n") ?>
 <?php endif; ?>