The files can still be cached by the browser when served locally. With the CDN the files may be cached before he even visits your site if he visits another site that uses the same version of the script from google CDN, but that is generally a very minor benefit.
I don't think its worth the effort to try and build something to auto update the files. For one thing the files don't change on google CDN, the files are version specific and have version specific urls, so for example when the next version of jquery comes out google will make it available but it will have a different url and the old version will remain available. http://code.google.com/apis/ajaxlibs/documentation/
There is no urgency about upgrading unless something isn't working or you are having trouble with something related to the script and sometimes upgrading can break things. For example there exist newer version of YUI but in mojoPortal we still use version 2.6.0 because I found that newer versions break the FCKeditor in some cases like if there is more than one on a page or the editor is inside a tab in IE the editor did not work (was fine in other browsers).
So I would host the files locally in your situation. If you see me mention that I updated mojoPortal to a newer version of those things in the release notes blog post you can consider whether you want to update your local copies.