I've had mixed experiences with whether users see the app show in Updates at all in the App Store. Generally it's safer to suggest that users will have to navigate through the App Store and search for your app to find 1.0. This is in line with what Apple says:
When the test period is over, you will no longer be able to open the beta build. To install the public version of the app, download or purchase the app from the App Store. In-app purchases are free only during beta testing, and any in-app purchases made during testing will not carry over to public versions.
App Store does not provide free copies of your app to TestFlight users — they will have to purchase the app, but users can keep the TestFlight build for free until the build expires. You can provide promotional codes through iTunes Connect to your TestFlight users if you wish to give them a free copy of the app.