Set up a plan to gradually increase your portion in the market over the next couple of years. Pick up Bill Bernstein's book The Intelligent Asset Allocator and look at some of his sample portfolios- there's an example of someone with a large lump-sum like yourself that wants to climb into the market over the next couple of years.
re: the fear that keeps people from investing... that's tough. In retrospect, it becomes abundantly clear when you should and should not have invested. Overall, bond/equity investments have a positive slope, so staying out of market will cost you money more often than it saves you money.
Get yourself a broad exposure (e.g. total stock market funds) and accept that sometimes you will pay 'full price' for your stocks, and sometimes you will get them on sale, but the crucial thing is to 'stay the course' and not panic when the sticker price drops or rises after you own it. Just keep buying, and the dips and rises will take care of themself. You don't get to beat yourself up over stocks you did or didn't pick, and can spend less or no time watching the market in general. which would probably leave you happier and more content.
Ben
P.S. The average investor does much worse than index funds over long time periods.
http://assetbuilder.com/blogs/scott_burns/archive/2009/01/30/if-you-play-the-odds-it-s-time-to-buy.aspxSome people do better, and there
may be some element of skill driving those gains, but a lot of it is a) luck, and b) not making stupid mistakes. Low-cost, broad stock indexes basically eliminates (b) and substantially reduces the effect of (a). Accepting 'average' gains from index funds actually puts you above average compared to most investors.