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I've been waiting for this feature for so long.... but when I have it, I have never liked it... I'd rather update my apps one by one... Updating them all takes so long compared to one by one.... (maybe it is just my Droid..... running rooted stock FRG01B with P3 1Ghz kernel)
Just my opinion, but... I always wait a few days before updating and then read the comments. Many times the updates have/cause problems and I'll let others be the Guinea pigs. Yeah,you can make backups before updating, but that can get tedious with some programs and lots of updates.
I have had a few set to update automatically just to see what happens.
When you go into the market, to each individual app at the top you can click "Allow automatic updating". When your phone polls to see if there is updates (mine tends to happen late at night), if this is checked, that app should update itself automatically.
I believe when an app adds a new feature, that changes it's permissions. Like say, an app goes from being a simple live wallpaper with no major permissions, to being able to download new skins for the wallpaper and store them on your SD card. That app will change to "update (Manual)". So you have to go and see what new permissions and allow them. Otherwise it will just continue updating it every time there is a new update.
the market randomly searches for updates, and when it does the apps that you set to auto update will auto update. I personally check the market for updates every now and then (probly like 10 times a day lol) so my apps rarely ever auto update since i usually see the update and manually do it before it can search for updates.
Instead of hitting update all the first time, you should update each app independently, and select allow auto update. Then the next time you won't have a pile of apps needing updates, they will update as needed. Sometimes an app will need a manual update but you'll get a notification if that is the case.