There, the web has beaten me at coming up with this solution, as it always does...
There is a new service called You Can Book Me (http://youcanbook.me/) that allows you to let others see when you are available and set an appointment with your through your Google Calendar. It's from the same guys who manage WhenIsGood.net.
Wouldn't it be great if instructors could set up office hours and have students fill them out themselves, and that this appointment would be added to their (electronic) calendar automatically? Well, stop dreaming, it's now possible!
By the way, sorry to bring this up, but this is exactly the feature request I have made about a year ago for the Sakai Schedule tool (http://jira.sakaiproject.org/browse/SAK-16756). Anyway, now someone has done it for us, so it's yet another proof that if you ignore a problem long enough, it magically goes away! No hard feelings, Sakai folks ;-)