Just tried updating FreeTime apps by enabling in-app purchases. Had no effect. Pity. It's hard to accept that being able to update an app wasn't a design consideration. Hopefully there's an easy work-around introduced in the near future.
We fixed it! Go into your parents profile and download the game. Update that game in that same profile. After we did this the game auto updated in the kids profile and tears turned to shouts of joy!... hahahaha no really it worked for us.
To add a little detail to fisherhunterallan, if you install in the parent profile, it will not re-download the app (which is good because it would take up double space). Once installed on the parent profile you can go to the app store and update the app. This updates the app for all users on the device.
It's so disappointing that basic functionality required to play many apps is unavailable in Freetime.