As seen below, I'm using 120x90 ads. The code should be placed as follows:
/* BODY HERE */
$body = <<<EOF
<div align="center">
<script type="text/javascript">
</script>
<script type="text/javascript"
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
</script>
</div>
EOF;
In control panel, the cache time should be 0 (zero) for this custom island.