Our receptionist moderates a contacts folder in Public Folders\All Public Folders. Can we use Outlook to make sure she receives an email message for updates as well as for new contacts?

The moderated-folder feature notifies the moderator only about new items, not about changes. Probably the simplest solution is to create a custom table view that sorts on the Modified date field. Then your recipient can glance at the table once a day to see whether any items have updates.