UK Amazon Kindle Forum discussion
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Getting your updated book to your readers
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Edit - not by default it doesn't, the Kindle owner will need to enable it to get updates automatically.

If it was a major update, and you can prove this, then all existing owners of the book would get an email advising them that it was updated.
If it was a minor update, then all existing owners would get a small exclamation mark next to the book if/when they logged into the 'Manage my Kindle' section of Amazon.
Of course, I could be wrong about how it works with the new automatic update...

I updated Wanted last week, but I haven't notified KDP. If you own the book, you can check if Amazon is making it available automatically, either by looking on Manage my Kindle, as Michael suggested, or seeing if it has been sent/synced to your kindle.
How can you tell if you have the update? The Title page has "Tango Alpha" (my new publisher name) at the bottom, and the date code at the bottom of the copyright page says 20140602
If no one has this new version, then we know it still doesn't go out automatically. :)
Last time I emailed KDP about an update (which was around August last year), they said it would take a week for them to review it and decide whether to notify readers by email or have it auto update.
BTW, if anyone doesn't include a date code in the front of their books, I highly recommend it.
Can you authory types please explain what is involved and how it works?