fix(output): dvc update should honor output cache flag

[ChillarAnand]

closes #10506

• ❗ I have followed the Contributing to DVC checklist.

• 📖 If this PR requires documentation updates, I have created a separate PR (or issue, at least) in dvc.org and linked it here.

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 90.99%. Comparing base (2431ec6) to head (be98101).
⚠️ Report is 185 commits behind head on main.

Additional details and impacted files

@@            Coverage Diff             @@
##             main   #10964      +/-   ##
==========================================
+ Coverage   90.68%   90.99%   +0.31%     
==========================================
  Files         504      505       +1     
  Lines       39795    41108    +1313     
  Branches     3141     3257     +116     
==========================================
+ Hits        36087    37407    +1320     
- Misses       3042     3063      +21     
+ Partials      666      638      -28     

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