The new version of My Coloring Book has a number of new features, but the most significant is the introduction of overlays. With overlays you can add logos/branding, add shading and tinting, and other cool effects. Check out the Using Overlays article.
There are also a number of other changes to allow greater customisation. You can now change the background colors, set default values for zoom, volume, and brush size and hide the zoom, volume, or brush size controls if you like.
Custom add-ons can now optionally use GET rather than POST for passing data.
Although this is a major upgrade, only the SWF file must be updated. However because there are also a number of new configuration options you should review your config.xml file. Read the configuration article, and perhaps compare yours to the one included in the update.