This really depends on exactly what you are trying to determine. If you are truly looking to determine if "The server is running, and able to be accessed", then I would say that this is most likely the most effective manner. The reason I say this is that the server itself could be up, but it might not be accepting connections, OR the connection that the application is using might be invalid (Incorrect username/password).
Therefore, given this, the timeout is a needed thing, as you want to validate true connection. If you want to simply see if the server is there, you could try pinging, but that simply tells you if the device is active, not necessarily if SQL Server is fully up and running, and available.
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