The newer version of the installer includes support for the 32gb model, as well as an updated info screen warning the user that this is a developer release. It also has some fixes for incorrectly cached downloads.
Now vs updating and then re-installing, you can get essentially the same results by upgrading. However, a simple upgrade won't do, you'll need to run (on the device):
sudo apt-get update && sudo apt-get dist-upgrade && sudo apt-get install linux-image-nexus7
The reason for the additional package install is that there was a change in the kernel meta-package structure. Doing this will essentially create a system that's the same as doing a fresh install with the new image.
It is a matter of preference at this point, as a fresh install is often preferred by some people to ensure a consistent experience, but an updated system should be comparable.