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I am about to update  http://extensions.joomla.org/component/ ... Itemid,35/ to cover joomla 1.0.12

Is it best for me to create a new extension or should i just update the existing one?

If it were me, I'd just change the title to 1.0.12 but others might have a different opinion.

I would do an update (did the same for Joomla diagnostics)

Thanks for your input. I think I will go for an update as their is no new functionality in the demo. But if the demo itself changes then i will do a new version