I believe you've hit a problem with the app store.
Today, at 12:58 PM PDT, Apple approved the latest version of TimeLapse (version 2.0). This new version requires OS 3.1 to operate.
The previous version of TimeLapse (version 1.1) did require only OS 2.2 or later. I suspect that you saw the info page for the old version of TimeLapse in the iTunes app store but downloaded the new version when you bought it.
While I have no control over this, I regret you hit this glitch.
I highly recommend upgrading to OS 3.1 as the latest version of TimeLapse supports the 3GS camera's full resolution. Additionally, iPhone OS 3.0 has a camera memory leak that will eventually kill TimeLapse. Apple fixed this in OS 3.1.