Say I have a simple table that has the following fields:
In your case, I believe the update will be faster.
Remember indexes!
You have defined a primary key, it will likely automatically become a clustered index (at least SQL Server does so). A cluster index means the records are physically laid on the disk according to the index. DELETE operation itself won't cause much trouble, even after one record goes away, the index stays correct. But when you INSERT a new record, the DB engine will have to put this record in the correct location which under circumstances will cause some "reshuffling" of the old records to "make place" for a new one. There where it will slow down the operation.
An index (especially clustered) works best if the values are ever increasing, so the new records just get appended to the tail. Maybe you can add an extra INT IDENTITY column to become a clustered index, this will simplify insert operations.