Read original post by Mike Francis at My Mobile Home
Scenario: You’re developing version 2.0 of your hugely successful Windows Phone application. You want to provide to your users a seamless experience when updating their app to this latest version. That is, you want bring over the current app state into the 2.0 version and not require the user to have to start all over again. You have included the necessary code to do this, but need a way to test it. You ask ‘ Is there any way to simulate an application update with the Windows Phone developer tools?’. You noticed that when using the ‘Application Deployment’ tool that the isolated storage for the app is initialized before the app is installed.