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Does the update apply to items i already have, or only to new drops?
All set items get updated.
All non-set items, if they got updated damage range for instance need to be refarmed. However, you usually will have the new damage ranges/affixes already in the cube if you previously extracted the power from that item (for instance Mask of Jeram went from 100 to 200% pet damage, and garg ring from 200 to 650%, for my Zuni build I just used the versions that where cubed before).
For some builds however you will like to have the new/better version of the item on yourself so you need to refarm it.