Same issue for me... Samsung Gear Live and a Nexus 5. It worked fine some hours ago, now everything like "set a timer to ..." or "set stopwatch to ..." brings up the alarm dialog. Restarting the phone and watch didn't help, neither did syncing the wear apps.
Really annoying since this is one of the features I actually use often.
I asked a friend to check if it works if he tries it with Google Now on his phone, since it DOES work on his Gear Live. Funnily, this broke the functionality on his watch too, so better don't tell your friends, seems to be a Virus distributed by chat
(this is for the german version "Setze einen Timer auf X Minuten", like it is suggested in the watch itself)
It seems like this is actually controlled server-side at Google - maybe its just an issue with some of their server nodes?
Google Nexus 5, Sony Xperia T, Motorola Moto G
Google Nexus 7 3G, Galaxy Tab 10.1 3G
Samsung Gear Live, LG G Watch