PokéBase - Pokémon Q&A
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It does - or it should. If it doesn't, your copy is either broke or you messed with your DS's/Computer's time settings.

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There should be a daylight cycle. The daylight hours each day depend on the season.
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To add to sumwun's answer, while the game changes the lighting to match the time of day, this does not effect the encounter rates of Pokémon. However, there are some overworld events that only activate at certain times of the day, such as the Casteliacone only being available early in the morning.

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