The proposal: new $update atomic modifier to identify objects in an array using a query criteria and update them. I've tried to keep the syntax of this as close to update() as possible.

$update:

In the update the following special tokens can be used:
$$ the array denoted by "field", defining the scope of the operation.
$ the current element identified by the query.

This may or may not duplicate some of the virtual collections ticket: http://jira.mongodb.org/browse/SERVER-142 but that ticket doesn't really contain any more than an idea that clearly a lot of people like. I'm hoping that this ticket can start a discussion that can end up in a useful specification. Some examples to follow....