There is a statement called

so.Last_Stage_Change__c = system.now();

system.debug('Current time:'so.Last_Stage_Change__c);

and the value of so.Last_Stage_Change__c should be today's date and time which is 10/4/2012 hh:mm:ss

but am getting yesterday's date and time. I mean the value which is being assigned to so.Last_Stage_Change__c is 10/3/2012 hh:mm:ss

Can anyone tell me what is the problem here and how does this system.now() work?