There's no daylight savings time setting on iPad that I know of. That should be automatically handled if you choose Set Automatically for your iPad time.
Reports of incorrect times aren't uncommon on iDevices, unfortunately. If you google, you'll find various explanations and attempted fixes. Wi-fi iPads appear to have more trouble keeping time, but I've noticed time drift (though only by a minute or two) even on my 3G iDevices.
If it were me, I'd just set time manually and leave it at that.
If you'd like more info, this link has lots, but note that some of the info might no longer be accurate with the most recent iOS upgrades:
What Time is it? Your iPad May Not be Sure | How-To | The Mac Observer