I agree! But update of work order should an option and not automatic, as there may be instructions specific to that one order that should not be over written.  
 
The only way to do this now, is to reconvert the Sales order to work order and cancel the old W/O. Not the best way. I think it would be cleaner to update the existing W/O because the W/O suffixes in our system correlate to the line items on the customer P/O. Once you cancel a W/O, the system will still use a higher number suffix than the last one used on the last W/O and you lose that correlation.