http://our.umbraco.org/projects/website-utilities/usitemap reworked.

sitemap.cshtml

@inherits umbraco.MacroEngines.DynamicNodeContext
@using umbraco;
@using umbraco.NodeFactory;
@using System.Xml;
@{
    // Clear any current response
    Response.Clear();
    // Set new response type to rss
    Response.ContentType = "text/xml";

    // Create the feedwriter and start document
    XmlTextWriter feedWriter = new XmlTextWriter(Response.OutputStream, System.Text.Encoding.UTF8);

    feedWriter.WriteStartDocument();

    // Set up/declare the rss content
    feedWriter.WriteStartElement("urlset");
    feedWriter.WriteAttributeString("xmlns", "http://www.sitemaps.org/schemas/sitemap/0.9");
    feedWriter.WriteAttributeString("xmlns:xsi", "http://www.w3.org/2001/XMLSchema-instance");
    feedWriter.WriteAttributeString("xsi:schemaLocation", "http://www.sitemaps.org/schemas/sitemap/0.9 http://www.sitemaps.org/schemas/sitemap/0.9/sitemap.xsd");

    // List all the pages in this site
    @listPages(feedWriter, new Node(-1))
  
    // Finnish and end the sitemap feed
    feedWriter.WriteEndDocument();
    feedWriter.Flush();
    feedWriter.Close();

    // Finish the response
    Response.End();
}
@helper listPages(XmlTextWriter feedWriter, Node nodeToProcess)
{
    foreach (Node node in nodeToProcess.Children)
    {
        if (!node.GetProperty<bool>("umbracoNaviHide") &&
            node.template > 0 &&
            node.template != 1141 && //uBlogsy DateTime Redirect.
            node.template != 1565) // Sitemap itself.
        {
            feedWriter.WriteStartElement("url");
            feedWriter.WriteElementString("loc", umbraco.library.NiceUrlWithDomain(node.Id));
            feedWriter.WriteElementString("lastmod", Convert.ToDateTime(node.UpdateDate).ToString("yyyy-MM-dd"));

            string sitemapPriority = node.GetProperty<string>("sitemapPriority");
            if (!string.IsNullOrEmpty(sitemapPriority))
            {
                feedWriter.WriteElementString("priority", sitemapPriority);
            }

            string sitemapChangeFreq = node.GetProperty<string>("sitemapChangeFreq");
            if (!string.IsNullOrEmpty(sitemapChangeFreq))
            {
                feedWriter.WriteElementString("changefreq", sitemapChangeFreq);
            }

            feedWriter.WriteEndElement();
        }

        // Recursive call.
        if (node.Children.Count > 0)
        {
            @listPages(feedWriter, node)
        }
    }
}

sitemap.master

<%@ Master Language="C#" MasterPageFile="~/umbraco/masterpages/default.master" AutoEventWireup="true" %>

<asp:Content ContentPlaceHolderID="ContentPlaceHolderDefault" runat="server">
    <umbraco:macro ID="Macro1" alias="SitemapMacro" runat="server" />
</asp:Content>