Hello Goh_Raj,
Answer 1): Yes, there has been an enhancement for the INSIDE option of this GP tool in ArcGIS 10; therefore the difference between 9.3 and 10 results are expected.
Answer 2): The request NIM047493 has been "rejected" because even a centroid is inside the polygon, it may still be too close to the boundary, if not on the boundary. The improvement in version 10 is to avoid point locations too close to polygon boundaries. Your examples showed the improved results, hopefully more satisfactory overall than before. The points are not necessarily at centroids.
Thanks,
Dan - in GeoProcessing