In app/code/core/Mage/Catalog/Block/Product/List/Toolbar.php
replace
if ($this->getCurrentOrder()) {
$this->_collection->setOrder($this->getCurrentOrder(), $this->getCurrentDirection());
}
by
if ($this->getCurrentOrder()) {
if(($this->getCurrentOrder())==’position’){
$this->_collection->setOrder(’entity_id’,’desc’);
}
else {
$this->_collection->setOrder($this->getCurrentOrder(),$this->getCurrentDirection());
}
}
Works fine on Magento 1.5
http://mydons.com/how-to-display-the-most-recently-added-products-first-in-magento-1-6-0-0/
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