http://www.nanmu.net/keli/blog/Lists/Posts/Post.aspx?ID=93
You may have used SPListItem.Update() method in sharepoint development, but you may don't know about SPListItem.SystemUpdate() method. Now we talk about the difference and relation about them.
First, let's see the SDK's description:
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SPListItem.Update(), Updates the database with changes that are made to the list item.
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SPListItem.SystemUpdate(),Updates the database with changes made to the list item, without effecting changes in the Modified or Modified By fields.
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SPListItem.SystemUpdate(bool incrementListItemVersion),Updates the database with changes that are made to the list item, without effecting changes in the Modified Time or Modified By fields, or optionally, the item version.
Now we can see, the same appointment is they are save the item changes to database. But, the Update method will effectint the modified time and Modified By Fields, the systemupdate method will not.