I finally got it to work – yay!
I stumbled across the solution whilst updating a set of iPad minis to the new iOS7 iLife and iWork, as one of the iPads already had the latest versions of the apps. How did that happen?
It seems that perhaps the elusive ‘Updates’ slider under ‘Automatic Downloads’ on ‘iTunes & App Store’ in Settings does work after all. What I think happens is that the updates are set to pending, and then when the iPad tries to install them it will ask for the password for the account you use with VPP on Configurator. However, this isn’t much use when setting up multiple iPads as the conditions for triggering a pending App update aren’t quite clear.
Here’s what I did instead:
1. Make sure that the App Store is enabled on the iPad
2. In settings, sign into the App Store using a different Apple ID than the one used for Configurator. I have one setup for each set of iPads so I used that. Make sure ‘Updates’ is turned on.
3. In the App Store, tap on ‘Updates’ and then tap on ‘Update All’ in the top left of the screen. It will ask for the password for the iPad’s App Store AppleID. But then in a few seconds, it will ask for the password for the Configurator AppleID. Enter this.
4. Done! You are now in Automatic Updates heaven.