Do apps included in the gApps zip get updated via Google Play? While using alternative ROMs like CyanogenMod 9(as i currently am), one flashes an additional zip file called gApps which contains apps provided by Google.

As Google releases newer versions of applications, will the newer versions be updated via Google Play or do I need to manually flash a newer version of the gapps.zip?

I'm asking because an update to the Google Play market app was recently released (which includes the ability to remove apps from the ALL MY APPS section) but I still haven't seen my market app updating itself.
Short answer: Gapps will be updatable via Play Store. You can set them to update automatically if you will (personally, I don't. I always try to find a free wifi hotspot to do updates ;)

More specific answer: The Play Store app updates itself silently in the background; you will never be asked for an update.

Longer answer: Gapps must be installed separately because the apps in the Gapps set are not open-source. It was a compromise reached between Google and ROM devs. In essence, ROM devs are free to create their own version of ROM as long as they exclude Gapps, but Google then went further to provide an installable Gapps.

That is why Gapps' updatezip are rarely updated; after all, Gapps still have the ability to be upgraded via Play Store.