Can you add new volumes/tasks to be failed over without disconnecting your clients?

This feature is ETA around December of 09' but could be Jan.

Can you update one half of the cluster to a newer version of open-e dss and then failover and upgrade the other half?

We are looking to do this as well but no ETA, though we might escalate this before Q1 of 09.

Does storage expansion work?

Yes but you still have to stop the service and the replication. No ETA on this yet.