How to Use Bukkit's Update Folder

I know that there's the update folder to place plugins in so they get updated when the server restarts but I want to know how to set this up. I have tried it before but it didn't look like it did anything. I also use RemoteToolKit to auto restart the server. I have read the wiki and it says that " The name of the folder to put updated plugins in, which will be moved upon restart. Default: update. NOTE: The folder MUST be in the plugins folder. Absolute paths do NOT work." This is sorta confusing to me and want to know if any of you would like to shed some light on this. I want to use this instead of some script as long as bukkit can do this.

Do any of you have any idea because I would like this to happen so I don't have to shutdown my server and just place them in the update folder.

EDIT by Moderator: merged posts, please use the edit button instead of double posting.

 

It's a few days old, but however - *bump*
I found a few lines about this in the Wiki but it didn't help me.

Plus: Does it only work on server-restart or does a reload do the job as well?