IIRC, this hasn't been debunked per se, but it was a very small, very limited study, and doesn't really do a great job of explaining homophobia in a broader population. (I mean, you're talking about 64 people in total; depending on your inclusion criteria, that could be a meaningless sample size.) Penile plethysmography is a proxy for sexual arousal; it's useful in some instances--like predicting whether or not someone will commit more sexual offenses in the future--but isn't even that great in those instances. If I remember correctly, there's strong evidence that disgust is a trait strongly associated with conservatism, and homophobia is a an extreme disgust reaction.

FWIW, I was casually--but quite virulently--homophobic when I was younger. I'd been raised in a very conservative, evangelical religious group, and I believed all the bullshit that I'd heard about gay people. That changed once I lost religion, and actually met people that were gay. That, of course, is only anecdotal evidence, and does assume that I'm neither gay nor bisexual (and I don't believe that I am), but it fits with what I've seen from conservative thought.