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PC REview have published a good introductory article about the white balance setting on your digital camera.

“On most digital cameras the user will find the white balance setting defaults to “Auto” mode. This setting works in most situations but is not very accurate. To achieve greater accuracy one needs to go into the menu mode and set appropriate preset white balance setting which could be “sunny”, “cloudy”, “flash”, “incandescent”, “fluorescent” etc. Some cameras have even greater control in the sense that the provided presets can be greater in number and may cater to something like “beach”, “snow”, “night scene” etc etc. It is always a good idea to use the specific preset as these settings will achieve better colour accuracy than by just using “Auto”. In my opinion “Auto” really means “Average”, come to think of it, that is what it really is. Why settle for average, when your camera has the required controls, use it to your advantage!”

Website: PC Review - White Balance