iPhone iOS 5 showing incorrect time zone

Solution 1:

You should see the Location you are in under the set automaticly button. As below. It is greyed out, as this is taken from your current location, so you must have location service enabled.

Solution 2:

I just had this problem and resolved it. My iPhone thought it was in New York when it was in Abu Dhabi.

Go to Settings > Location Services > System Services

System Services is the last item on the Location Services page. Scroll all the way down and tap it.

Inside System Services, there will be options for: Cell Network Search, Compass Calibration, Diagnostics & Usage, Location-Based iAds, Setting Time Zone, and Traffic.

On my iPhone, Setting Time Zone was switched off. I turned it on and voila! I now have the correct time zone.

I may have turned off location services when I was trying to troubleshoot battery life under iOS 5 and forgotten to turn it back on.

I hope this is helpful.