Occasionally I find myself updating web references, to no avail. VS.NET 'says' it's updating, but nothing seems to happen (the reference*.xsd files are unchanged). I used to get around this by deleting and re-referencing the web service, which is a pain.
Turns out that in addition to the "Update Web Reference" option when selecting the reference, there is a "Regenerate BizTalk Files" context-menu option if you select the Reference.map file beneath the reference itself. This does the trick. :-)
I'm guessing that the update simply changes the .disco / .wsdl files, whilst the regenerate option change the reference*.xsd files.