If you upgrade iOS with iTunes, your device will be un-jailbroken and Cydia packages will be deleted. Before upgrading iOS, make sure a jailbreak is available for the new version.
As of November 9, 2014
Untethered jailbreak for 8.0-8.1
Pangu Team has released an untethered jailbreak for iOS 8.0-8.1.
You can download it from http://en.pangu.io/ for Windows and OS X. It includes Cydia.
For news, follow @PanguTeam and @saurik on Twitter.
If you want to upgrade your device from an earlier iOS version:
You may choose to restore your device with iTunes in order to upgrade your device to iOS 8.1, and then jailbreak it with Pangu 8.0-8.1 to get an untethered jailbreak. It's best to click "Restore" instead of "Update" in iTunes for best disk space and a more reliable jailbreaking experience.
Over The Air (device-based) upgrades do not work on jailbroken devices.
Make sure to do an iTunes or iCloud backup of your data before restoring, and write down your Cydia packages so that you know what to reinstall after restoring and jailbreaking again.
How do I find my current version?
Open the Settings app, tap General, tap About, and look at Version.
(Your device's version is also listed at the bottom of the Cydia "homepage".)