A SQL server DateTime type is a date and a time in SQL 2005 there is no date only field type, you cannot remove the time component and still have a field that is a DateTime type. Your options are the ones you have outlined: Convert to (n)varchar and remove the time componenet, leave it as a DateTime and accept that it has a time component. Why do you wish to remove the time component, what problem would this solve for you.
Further to your comment below, the database is not where you should be formating you Date strings to display in your GridView. You do display layer things in the display layer, in this case in the gridview. You need to use a format string in your data when data binding to the gridview. Yee examples below.
BoundField:
<columns>
<asp:BoundField headertext="CreationDate" dataformatstring="{0:dd-MM-yyyy}" //rearrange these letters as necessary
datafield="CreationDate" />
</columns>
TemplateField
<itemtemplate>
<asp:Label id="Label1" runat="server" Text='<%# Bind("CreationDate", "{0:M-dd-yyyy}") %>'>
</asp:Label>
</itemtemplate>