Menu -> Settings -> Date & Time -> Set Time zones
This is for time zones....nd its quite surprising that none of the Indian cities feature here and even stranger that Karachi is here.
I agree, Apple is sorta showing Anti-India feelings. After all I-Pods in India are the 2nd most expensive in the world; only after Brazil.
YOU can of course still set the correct time and synchronise it with ur PC, but thats not the point.
I do hope an Indian city will feature with the next firmware update.