Yes, exactly, object rotates around it's center, but you can (in 3D view basic UI, same in 2.4x and 2.5x) click different rotation systems to be used. For example, moving or rotating camera is much easier, if you use Normal. Global is probably the default.

When using Normal, the rotation is not base (global) X/Y/Z but it's based on objects own location and rotation.

Sorry, if I'm confusing, this is much, much, easier to show than to describe...