The reason your Organization and Contact data may not update upon pulling in a new application has to do with the way the data for these record types is handled.

When users pull in new Applications with information from existing Organizations and Contacts, only the data from specific fields will update.

For Organizations, the following fields have the ability to be updated if the record already exists in your Grantmaking site:
Address
City
State
Zip/Postal Code
Country
Phone
Extension
Fax
Email
WWW Address
Organization Annual Budget

For Contacts, the following fields have the ability to be updated if the record already exists in your Grantmaking site:
Home Address
Office Address
Home City
Office City
Home State
Office State
Home Zip/Postal
Office Zip/Postal
Home Country
Office Country
Home (Main) Phone
Office (Main) Phone
Home (Main) Extension
Office (Main) Extension
Home Fax
Office Fax
Mobile
Pager
Email

If the field you wish to update on the existing record falls outside of these guidelines, you must update the field manually.