While I agree with you I also think that sadly average person doesn't really care about permissions at install time simply because there're lots of them. But app update is different -- there're usually 1-2 permission(s) added with update so there's huge chance that user will notice it and think about why these permissions are needed.
I usually refuse to install apps that ask for the wrong permissions. Some apps literally display static offline content and ask for permissions, while I've installed games that never need any permissions (I guess outside of the basic ones for writing to disk).
On the one hand you may not install an update because the app wants more permissions than you consider acceptable.
On the other hand you may not install the app at all if it asks for too many permissions during the initial install.