That is all taken care of for you here at WordPress.com, and most times when a new version is near release, we will already be running it here ahead of when everyone else can get it, and sometimes many weeks, or even a month or so ahead of the release.
thesacredpath already answered you. There is no update button on the dashboard of any free hosted WordPress.COM blog. The update button is only found in wordpress>ORG installs. Read this please > http://support.wordpress.com/com-vs-org/
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