The SharedPreferences.Editor class has a clear() function, what removes all your stored preferences (after a commit()). You could create a boolean flag which will indicate if updated needed:
void updatePreferences() {
    SharedPreferences prefs = ...;
    if(prefs.getBoolean("update_required", true)) {
        SharedPreferences.Editor editor = prefs.edit();
        editor.clear();
        /*....make the updates....*/
        editor.putBoolean("update_required", false)
        editor.commit();
    }
}
And after that you need to call this in your main (first starting) activity, before you access any preferences.
EDIT:
To get the current version (The versionCode declared in the manifest):
int version = 1;
try {
    version = getPackageManager().getPackageInfo(getPackageName(), 0).versionCode;
} catch (NameNotFoundException e) {
    e.printStackTrace();
}
if(version > ...) {
    //do something
}
EDIT
If you want to do some updating operation, whenever the version changes, then you can do something like this:
void runUpdatesIfNecessary() {
    int versionCode = getPackageManager().getPackageInfo(getPackageName(), 0).versionCode;
    SharedPreferences prefs = ...;
    if (prefs.getInt("lastUpdate", 0) != versionCode) {
        try {
            runUpdates();
            // Commiting in the preferences, that the update was successful.
            SharedPreferences.Editor editor = prefs.edit();
            editor.putInt("lastUpdate", versionCode);
            editor.commit();
        } catch(Throwable t) {
            // update failed, or cancelled
        }
    }
}