Updating OS and storage upgrade will not reinstall any apps, but Google apps will be uninstalled (you can reinstall them as the last step and obviously they will be the latest versions.) and the Storage Upgrade will delete everything, so you need to make a good backup first.
Especially in combination with a storage upgrade Titanium Backup is recommended. When you restore from the backup the versions you had installed before will be installed again.
So in short: normal apps will remain in their current versions but GAPPS will be updated.