Well that should work... Except I'd specify the variable at the top.. Just because it's a good habit to have. I would probably also have a boolean so the tower doesn't look unless a target is acquired.

var hasTarget = false;
var myEnemy : Transform;
private var myTransform : Transform; // Cache the transform to reduce slow get-component calls

function Start()
{
 myTransform = transform;
}

function OnTriggerEnter (enter : Collider) 
{ 
 if(enter.gameObject.tag == "Enemy" && !hasTarget) // Don't want to acquire a target if we still have one 
   { myEnemy = enter.transform; 
     hasTarget = true;
    } 
}

function Update()
{
 if (hasTarget) myTransform.LookAt(myEnemy.position);
}

Also worthy of note - both objects need colliders for this to work, and at least one has to be set to trigger :)

OnTriggerEnter is easier to use and has much better performance.

Could you ompare the transform.positions and use distance? If you can, this is very cheap and effective.

if((transform.position-vBadObject.transform.position).magnitude<myAlertDistance){
StartFiring();
}