Its not really Windows Update that's being used in this exploit, its the Background Intelligent Transfer Service which, in a nutshell, is a service that downdaloads data to your PC while minimising disruption to other network activity i.e. surfing the net, gaming, or downloading other files. Its a built-in feature of Windows XP but has only been implemented once or twice.
Windows update makes use of the BITS service. Malware can make use of the BITS service. Its not logical to then say that Malware is exploiting Windows update. Any more than an attack that utilised Java would be exploiting Azureus (A java application).
The reason malware utilising BITS is a problem is because with any application-level firewall, permission for BITS to access the net is already granted and so unlike a regular trojan, the firewall won't spit a potentially suspicious permission request up when it tries to download more malware from the 'net. This same exploit is true of the JVM too.
A solution to the problem might be to instance such services. But by doing that it sort of renders them not services anymore.
So eh, mark my stats +1 pedantry, but to perpetuate this as a Windows Update exploit isn't accurate.