Gen 1 had auto-sleep tracking enabled sometime in late spring or early summer 2015. However, it was not as accurate as activating it manually. I had already developed the habit of activating it every night before sleep, and this is one of the main reasons I got the Band was to optimize my sleep, so I wanted all the accurate data I could get.
If it is important to you, I'd recommend activating it manually. It isn't that hard to do once you get in the habit.