The two installations are very different.
wubi is a full installation and installs ubuntu into a file with is mounted at boot. Yes an update replaces files and the file can become full.
Booting the iso with persistence is very different. The iso contains a ro file system (squasfs) which is mounted. When you use persistance a cow (copy on write) file is made. When you upgrade, the old files are NOT over written, they are copied to the cow file system and then updated. The cow files are overlaid on the ro files. So yes it takes up more space.
IMO persistance is best for maintaining customizations and data in your home directory. System updates or installing packages creates large files and tends to be error prone.