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The problem with updated versions of a book, from Amazon's perspective, is that a customer's annotations and bookmarks are linked to the specific copy of the ebook that they obtained when they first bought it. If the customer deletes the book from their Kindle, then subsequently re-downloads it from their archive, Amazon's view is that the customer will expect their annotations and bookmarks to be retained (since that is what Amazon says will happen). If Amazon simply deleted the original version of the book, and replaced it with the new version, all of the customer's annotations and bookmarks would be lost, and I imagine Amazon would be snowed under with complaints from customers.
This is an issue that Amazon are aware of, and have said they're working on (i.e. how to enable annotations and bookmarks to carry forward from one version of a book to another). For now, however, the only way to obtain an updated version of a book you've previously purchased, is to contact Amazon Kindle customer service and request to have the new version replace the old version. Last I heard, Amazon sends you an email explaining that you'll lose any annotations and bookmarks on that book if they replace it, and asking you to reply to the email to indicate that you understand and agree to this, after which they remove the book from your archive so you can re-download it and get the updated version.
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