Life on Mars/WMG

One or more of the characters is a Time Lord.
He's the Master. Duh.

Gene Hunt is Sam's id, and Frank Morgan is his superego. Sam acts as the ego, and the reason he's in 1973 is to find a balance.
The id (Gene) controls our basic impulses. It is in charge of basic wants (food, sex, drugs, etc). It is emotionally underdeveloped, given to violence, and incredibly stubborn. The superego (Morgan), however, keeps the id in check. It is the overarching sense of right and wrong. The ego (Sam) strives to find a balance between the two. At the beginning of the show, Sam is overly rational and does not trust his gut instinct. Therefore, Sam's choice of Gene over Morgan is his final acceptance of his id.
 * And where are those base impulses encoded? In our genes.

Sam is in a coma because of a tumour. Gene Hunt is that tumour.
As the tumour grows, his role in Sam's life has expanded. Or possibly vice versa.

Sam was native to the 1973 timeline, but delusional.
In other words, Frank Morgan was telling the truth. It's the viewers who have ascribed importance to the perfect correspondence between Sam's delusions of the future and the history that we know.
 * After Sam rejects the "delusion" of the present day, Frank Morgan no longer had a reason to talk to him, and every reason to stay away. M.A.R.S. was a secret project, and it's possible only Frank and Sam knew about it. Since Sam will never speak of it, Morgan's best option was to take that secret to his grave. why Sam is left to his own devices and never tracked down or apprehended by the division which placed him undercover (according to Morgan's explanation).
 * That said, it IS true that the Gene-gumi forgave Sam's treachery awfully quickly.

Only Sam's mind was thrown back in time, into a body which had lost it's own.
Sam Williams' brain dies after he is in a car accident in 1973. Sam Tyler's body is seriously damaged in a car accident in 2006.For some reason, possibly to save Gene and the gang, Sam's mind/soul is sent back in time into the body of Sam Williams.

Sam can still hear the voices of those around him in 2006/7 because his body is still alive and there is still a link. His brain has difficulty living in the dual state and at time he hallucinates mixing the 'real' 1973 imagery around him with what he can still hear in 2006/7 - The Test Card Girl, the Open University professors, and...as it 'appens...Jimmy Saville on the radio.

So Sam, with all his memories of the 21st Century is using them to solve real cases in 1973. Sam finds out about the real Sam Williams, who's body he has and also finds out that he was using the alias Sam Tyler. The gravestones of Tyler's parents may have just been hallucinations or a big coincidence. His psyche was becoming more unhinged as his body was being repaired in 2007 and part of him was being dragged away from 1973. He wakes up in 2007, his mind pushed back through time to his normal 2007 body. One can only presume that if he didn't go back to 1973 again the Sam Williams body would fall over dead, or at least braindead.

He leaves tapes of his trauma and realises that the stress of being dragged back into his body and the ultimate mundaneness of his 'real' life, means that he is numbed to feeling. Remembering Nelson's words, and knowing that he still has a job to do in 1973, due to a promise he made to Annie, he realises to return to 1973 he must destroy his 2007 body...so he jumps off the building. His body incredibly damaged and his psyche is pushed back through time to the empty body of Sam Williams. He saves the day, gets the girl, and drives off into the sunset, or in this case, a rainbow.

When Sam again hears the voices on the radio he changes the channel, finally cutting off all links to 2007. His body dies. Now there is only one body and one mind...no more stress. Sam Tyler's mind is permanently in Sam Williams body.

Sam Tyler really did travel in time, at least three times, and it messed up reality.
Although he didn't realize it, Sam had some kind of latent ability to travel in time that was triggered by the car accident. He jumped back in time instinctively without realizing it.

But the effect of a traumatized, unexperienced human roughly pushing their way through time also messily pushed a couple/three alternate realities/possibilities into one, resulting in the reality of Sam Tyler hallucinating in a coma in 2006 and the reality of an amnesiac man named Sam Williams working on an undercover mission with a man named Frank Morgan merging into the more stable reality of Sam Tyler being in 1973. Because Sam had time-travel abilities, had already been through time, and was the one to cause all this in the first place (albeit inadvertently) and the focal point of the messed-up realities, he was exposed to all the "glitches", which made him see and hear bits of things from the alternate realities. The unsheltered time travel probably also had an effect on his mind, which only escalated his stress.

The longer this went on, the worse it got, until it eventually culminated in the possibility of Frank Morgan's mission and the possibility of Sam's brain tumor affecting the reality of Sam's presence in 1973 too much. The universe forced Sam back to 2006, but since he wanted to go back anyway and had more purpose, intent and forewarning this time, he managed to guide the jump back so things didn't go quite so wrong again.

Reality settled, with most of the possibilities vanishing but some of them being integrated into the true reality, which is why Sam woke up in a hospital-the reality of him traveling in time and the possibility of him being in a coma merged into one. When Sam discovered he wasn't happy in 2006, he made the decision to go back by jumping off the roof. Since he was fully aware of his intent this time and had experience and wasn't under severe stress (at least, not as much as the previous two times) the jump went much smoother and left reality more or less undamaged. There were a few errant strands left, as evidenced by the voice on the radio right at the end, but they weren't enough to make any major changes, and since the only person who could detect them decided to ignore them, they didn't make any difference anyway.

In 2006, Sam basically vanishes in the air above the office building. Eventually he is declared missing; like people sometimes do in real life, he simply vanishes one day and is never seen again. It's assumed he killed himself because everyone noticed he was depressed around that time. Alternatively, the universe compensated for another reality rip by further merging the reality of mad-Sam and time-traveling-Sam, so that as Sam goes back in time to 1973 he also falls and dies in 2006 at the same time, resulting in a body in 2006 being buried in his name, while the real Sam lands in 1973 again.

Since reality has been altered and shifted back into place, the nature of the mix-up with the possibility of Sam Williams betraying the division is changed. The characters move past it and don't question it and Frank Morgan and the undercover case melts into the background. Frank Morgan and the Test Card Girl are probably results of the reality screw-up; possibly one or both of them are powerful figures in their own right who know more about the nature of reality/time travel than Sam and, of course, us.

The Hank/Frank Morgan Connection.
I think Frank Morgan's pathophysiology of time travel makes the most sense. Sam sustains a brain injury and the increase in intracranial pressure from swelling (and the tumor) displaces him in time. While the trauma to Hank Morgan's brain (in Connecticut Yankee) was likely less severe than Sam Tyler's, for some reason, Morgan was sent back to the sixth century and Tyler only sent back a few decades. The only reasonable explanation is that because of modern medical technology, Tyler's injuries didn't require 1200 years of bed rest to heal.

I believe the Jackson-Pratt drain and Mannitol have reduced recovery time for a nasty blow to the head. At least I believe it's reduced it to the point where someone with a minor head injury may be displaced back in time a week or two before the injury, at a point where they have the chance to prevent it completely. I have no proof for this theory, but I've noticed that there are fewer people in the neuro wing lately.

Sam never woke up.
His decision at the end of S2 to jump was not between the real 2000s and the false 1973. It was between a false 2000s and a false 1973. It was a dream within a dream when he 'woke up'- what really happened was just that he gave up on getting out of the coma after this (symbolised within his mind as jumping off a roof) and decided he may as well have the more interesting life in the 70s if it was all just dreamt up anyway. That giving up is also perhaps wtf is up with the test card girl 'switching off' the TV. Now he's given up, she's not needed, and she turns herself off to leave him to his delusions. This is also why the decision seemed to be so abrupt and based on it not being 'real' because he couldn't feel anything; he meant literally.

It's also possible this giving up leads to him dying in the hospital he's actually in, hence the radio chatter he heard at the very end in the Cortina.

Sam witnessed a main character's murder as a child
Sam's flashbacks to a woman in red running screaming through a forest come true in the Season 1 finale, when. In this continuity, Sam's young self goes back inside and doesn't witness the attack. If Sam's situation is a coma-dream, his mind creates the character of If Sam's situation follows the   And if Sam is back in time, then when his younger self doesn't witness the attack because of his own intervention, it's possible he may lose the memories he himself has of the event because it has now never happened - of course the time travel part has pretty much been jossed.

The characters in Life on Mars are Roundworld expies of Discworld Characters.
Anyone who's read any of the City Watch books can easily identify the 4 main watchmen. Chris and Ray are Nobby and Colon (or Colon and Nobby), Sam is Carrot, and Gene is a more violent version of Vimes.
 * And for a bonus point, Policemen time travelling? Nightwatch, anyone?

This series is actually set in the same reality as Some Mothers Do 'Ave 'Em
See Some Mothers Do Ave Em for more.

Lost Christmas takes place in the same continuity
There really is a cosmic force in Manchester which takes people back in time to right past wrongs.