I don't know if timezone really works in rails.
In my rails 3 application.rb file I have:

config.time_zone = 'Rome'
config.i18n.default_locale = :it
config.encoding = "utf-8"

My database is postgres.
I've created some migrations and put some records.
The time in created_at and updated_at fields is 2 hours back.

All times put into the db should be in UTC, is that what you are
seeing? Make sure you look directly in the db to check this, do not
use Rails as then you may be seeing it adjusted unless you are