Update / Upgrade

We were wondering with my collegues, when can we make a (or what is?) difference between update and upgrade?

Update means "to bring up to date", while Upgrade means "to raise to a higher grade or standard" Let me give you some examples:

1)Books or files are updated. You revise them and make the necessary changes.
2)Sevices can be upgraded. (for example, you have digital cable and now you subscribe to HD (High Definition) cable. You are upgrading your cable service.)

Hope it helps!
Regards!