I am trying Wix 3.6 and this is how it looks right now :
&
You could add in a reference to the WixUtilExtension.dll to the installer project, then use XmlFile to update the app.config like:
<Property Id="SERVICEADDRESS" Value="http://serviceaddress"/>
<util:XmlFile Id="UpdateBaseAddress"
Action="setValue"
File="[DirApplication]$(var.app.config)"
SelectionLanguage="XPath"
Permanent="yes"
ElementPath="/configuration/applicationSettings/...."
Name="baseAddress" Value="[SERVICEADDRESS]" />
Note that you'll need to set the directory and the name of the .config file (you could just use $(var.ProjectName.TargetFileName).config which should work it out for you automatically