The strangest thing happened this morning. I noticed the clock on my iPhone was 2 hours behind! And because of the "extended settings" I installed (more on this later) I could not change the time manually. The region was set correctly (Manama, Bahrain).
Solution: Just connect your iPhone to the computer and run iTunes. That's it; your iPhone time will be restored.
UPDATE: Turns out the cell tower near my flat had it's time wrong and it kept updating my iPhone clock. This also happened to a friend of mine's Blackberry. Problem fixed now!