Update: Anyone that has purchased Garage band before still has access to everything. I didn't find any IAP so it's a free upgrade! I'm on iPhone 5 iOS 7 btw...
How it works for existing purchasers of the older version of GarageBand: I'm guessing that before it downloads it checks to see if you already own it. Then what it does is download the previous version first and then it updates the older app with the new stuff. There is no IAP purchases after that. It's a completely free upgrade. Although it does look like they dropped support for audiobus and added a feature called "inter-app Audio Apps" which it allows you to record any app that supports it.
I think the "Inter-App" idea seems better than audiobus to be honest, because now it will be like loading plugins into the app like an example of an AU plugin for Mac but for iOS devices.
GarageBand still supports Audiobus. And of course Apples own take on it, IAA (Inter App Audio). You can only use GarageBand as a host in both AB and IAA. So GarageBand is still closed down that way (can't even process GarageBand through IAA effect apps). They did however add an option to render and export uncompressed aiff to apps supporting that, so no more compressing the audio and having to email a low quality m4a sound file, which is a step in the right direction. IAA is kinda a mess right now, both for users and devs. Apple has a lot of work to do on IAA to get it into a stable and reliable place. Lots and lots of issues (IAA apps can be stuck running in the background without showing up in the task switcher, is one of the more annoying bugs since it'll drain your battery/performance, requiring a hard reset or a open/close the rogue processes). But it's still early days for IAA and I'm sure Apple are doing their best to improve it all, at a more aggressive update schedule then 1 update per year..
