On update user files are not effected (mostly). Applications (~/Applications or /Applications) files and user files (~/Library/Application Support) are kept in different locations. Most of the times only application files are updated and only developer decides what should happen with user files. If older user files are not compatible anymore and new version of application can't convert your user files to newer version, configuration files of that application will be damaged and removed. Application will start as first time and reconfiguring will be needed (if required at all). For instance Skype requires login information.

Other files not related with application is touched.