Pretty much true. I have some time to kill, so I'll write a little explanation... somebody may appreciate it, although it really doesn't add much!
The LCD is called a "twisted nematic" type. At room temp the liquid crystals align themselves in a helical config, which rotates the linear polarization of light transmitted through it. The front and rear (linear) polarization filters are rotated with respect to each other*, so for light to be transmitted through both, the LCD needs to rotate the polarization which it normally does! Under the application of an electric field along the LCD's 'axis of twisting', the twisted structure is disrupted as the crystals align with the electric field, and the light's polarization is no longer rotated, hence an opaque black segment. Heat also disrupts the helical structure of the twisted nematic crystals: the extra thermal energy causes them to move about more and break out of their nice ordered structure. When the LCD cools down, the crystals chill-out and reform their structures again, just like when an applied electric field is removed, making the display transparent again.
The display blacking-out due to lots of Sun doesn't damage the LCD, but long UV exposure may well damage the filters and of course the heat is not good for the "battery". (The UV will also de-polymerize the G-shock's resin.)
*For normal displays. For inverted displays, the filters have the same orientation, and the polarization-twisting causes the display to be opaque instead of transparent.