If the SQL instance is used ONLY for purposes of receiving the log shipping (and no queries are executed against it), you do not need a second SQL license. If you use that second server for snapshot reporting or any sort of querying at all, then a license would be required.
From the SQL Licensing FAQ: http://www.microsoft.com/sqlserver/2005/en/us/pricing-licensing-faq.aspx
Q. If I am doing log shipping in an active/passive failover configuration, how should I license the backup server?
In this scenario, the passive server does not require a license, unless the passive server has more processors than the active server, and the active server is licensed under the per processor model.
And... with a pretty picture: http://www.microsoft.com/Sqlserver/2005/en/us/special-considerations.aspx#passive