Post upgrade of desktop --- should we replace all the reader and writers or are these upgraded to latest version automatically?

When you upgrade to a newer version of FME, the readers and writers in your workspaces do not update to their latest versions. All readers and writers continue to work the same as they always did, according to their versions when you initially added them. If you choose, you can manually update the individual readers and writers in your workspaces to the the version of FME Desktop you are currently using.

More info here: https://docs.safe.com/fme/html/FME_Desktop_Documentation/FME_Desktop/Workbench/Updating-Readers-Writers.htm

Thanks so much and for the link! Where can I go to see the version differences for the readers and writers?

Unfortunately I'm not aware of any such page. Perhaps someone from Safe can chime in, if something like that exists.