An updated to the latest Drupal for Facebook requires some changes to be made manually. For one, the callback URLs have changed, and this requires that you edit your settings on Facebook.com. So there was no way to completely automate this update.

Quite a lot of improvements have been made. So while there is some hassle in making these changes, it will be worth it in the end. As usual if you encounter problems, use the issue queue on drupal.org. http://drupal.org/project/issues/fb

• settings.inc has been renamed fb_settings.inc, to avoid confusion with the settings.inc supplied with Drupal. Edit your own settings.php to include fb_settings.php.
• Code specific to canvas pages has moved to fb_canvas.module. Enable the fb_canvas module and edit each application node to restore your settings. Sorry that some settings may have been lost during this upgrade.
• The canvas page callback URL has changed. After editing your application node, the view tab will suggest a callback URL. In the facebook developer app, edit your settings to use that URL. In the past, the URL was simply the front page of your site. Now, you will append fb_cb/NID/ to that URL, where NID is the node id of your
  application.

I've changed some things about session management, and how URLs are constructed (no more hacking the global $base_url). Do let me know if you encounter any problems.