RPI-Update is a utility to update the Raspberry Pi firmware
When a new firmware is released for the Raspberry Pi it is made available on new SD card images for Raspbian. If you do not wish to install a new image but just update your existing SD card then you can just use the commands
sudo apt-get update
sudo apt-get upgrade
Which will update your software to the latest version and upgrade you firmware to the latest stable version, which is recommended for most users.
If you need the latest version of the Raspberry Pi firmware that is not currently available via the command above then you can update just the firmware with the RPI-Update program by Hexxeh.sudo rpi-updater
More information is available at https://github.com/Hexxeh/rpi-update