If you change your inc() function to this
public static Integer inc(Integer i) {
Integer iParam = i;
i = i+1; // I think that this must be **sneakally** creating a new integer...
System.out.println(i == iParam);
return i;
}
then you will see that it always prints "false". That means that the addition creates a new instance of Integer and stores it in the local variable i ("local", because i is actually a copy of the reference that was passed), leaving the variable of the calling method untouched.
Integer is an immutable class, meaning that you cannot change it's value but must obtain a new instance. In this case you don't have to do it manually like this:
i = new Integer(i+1); //actually, you would use Integer.valueOf(i.intValue()+1);
instead, it is done by autoboxing.