9
In order to update the service configuration you need to modify the *.cscfg file and execute csrun.exe (in C:\Program Files\Microsoft SDKs\Windows Azure\Emulator):
csrun.exe /update:<deployment-id>;<service-configuration-file>
Note that this seems to work only when running the application without debugger.
I recently blogged about this here: Controlling your instances in the Windows Azure Compute Emulator (look under Handling the RoleEnvironment.Changing event in the emulator).