SUMMARY:

When the 'Hours Per Day' is changed in a users profile, it affects all the future timeoff bookings.
 
CAUSE:
When a timeoff is booked for a full day, it picks the hours based on 'Hours Per Day' set in the users profile.
Similarly, if the accrual of a timeoff is set to 1 day, multiples of a day(3) or a day+fraction of a day (1.25 days), the application calculates these accruals of each day based on the 'Hours Per Day'.
Hence,
When a users 'Hours Per Day' is changed, it affects all the future timeoff bookings and balance, however, it does not affect any of those in the past.
 
Example:
A user who joined on 1st January 2011 has, hours per day set initially to 8.
The user has a timeoff policy for vacation, where he accrues 1.25 days on the 1st of every month.
The Timeoff history report for the period 1st Jan 2011 to 31st December 2011 would look like the Pic 1 (Check attached pic)
 
The user has booked timeoffs for future, for November 2011 and December 2011, which has been approved.
The Timeoff history report for the period 1st Jan 2011 to 31st December 2011 would look like the Pic 2 (Check attached pic)
 
After 6 months (1st July 2011) the users 'Hours per day' is changed to 7.5 hours.
Now, if a Timeoff history report is run, the users hours would show up as seen in the Pic 3 (Check attached pic)
 
In this case, the days taken (i.e. booked) would show up as 1.07 instead of 1.00
This is because, a work day which has 8 hours is equal to a 1.07 days of a 7.5 hours day. (8/7.5 = 1.066666)
The Days remaining (balance) would change accordingly.