I\'ve a Windows Phone 8.0 app on the Windows Phone Store, and I want to update my app to Windows Phone store API (and not Windows Phone Silverlight 8.1) to prepare Windows 8
TL;DR; - It preserves data on Isolated Storage when updating from WP8.0 to WP8.1 Runtime.
Because the provided link to MSDN says only about Silverlight apps, and it's not clear (if I hadn't missed something) what would happen in case: I've old WP8.0 Silverlight App and now I decided to upgrade it to WP8.1 Runtime - I've performed a simple test:
So it turns out that LPains answer is correct (+1).
Do you mean update the code or update the application in the store?
If you mean update the code, you have to recreate it from scratch. You may be able to use some content but a lot has changed on the new Windows Phone 8.1 (Windows Runtime) including how you write Xaml.
If you meant update in the store than yes, that will work. When you update your app with a new one on the new format the store automatically understands and migrates the IsolatedStorage data: http://msdn.microsoft.com/en-us/library/dn642081(v=vs.105).aspx