The file wp-includes/feed-atom.php in WordPress 2.2 contains code for generating an Atom feed. (In WordPress 2.0, the code is in the file wp_atom.php.) Here are lines 34 and 35 from feed-atom.php:
<updated><?php echo get_post_time('Y-m-d\TH:i:s\Z', true); ?></updated>
<published><?php echo get_post_time('Y-m-d\TH:i:s\Z', true); ?></published>
Both the updated and published fields use the function get_post_time, so the date output will end up being the same. Line 34 should be replaced with the following:
<updated><?php echo get_post_modified_time('Y-m-d\TH:i:s\Z', true); ?></updated>
I've been using this modification in my own blog for 10 months will no ill effects. Feed readers such as Vienna, which I am a developer for, can correctly parse this updated date information and respond accordingly.
See the Atom API for reference on the updated entry field.