Microsoft is no longer charging developers and publishers a fee for updates according to multiple sources speaking to Eurogamer. Apparently, Microsoft made the change to its policy on updates earlier in the year. Prior to that change any updates after the one free update publishers were entitled to cost developers "tens of thousands of dollars."
Microsoft has always charged a fee when developers first submit their games to Microsoft's certification process so they can be approved for release, and the company normally grants developers one title update free of charge. Sources have told Eurogamer that subsequent re-certification as a result of a title update is now free. This applies to Xbox Live Arcade games and full retail games. There are a number of limitations to this entire process still. For example, if a developer is making an "excessive number" of re-submissions due to a given update failing the certification process, Microsoft reserves the right to issue a charge.
A number of developers have complained about Microsoft's patching costs including Double Fine boss Tim Schafer who mentioned the $40,000 cost to patch Xbox 360 games. Fez developer Polytron also decided to re-issue a patch that corrupted a small minority of player's save files because fixing it would require the very costly process of getting the game re-certified.