I can update the cloud by visiting their site and telling it to update. It doesn't pull from all of my blog posts - just the most recent ones.
I've seen another type of word cloud on the blogs of some authors. They used Wordle. This cloud does not update automatically, but creates a static image. To change the words, you have to create an entirely new image. I think this one is more accurate.
I've put both clouds on my blog's sidebar