Gretchen, here are a few alternatives for triggering the "update all contacts" action on the child contacts of the parent account record:
CRM 2011 Distribute Workflow Activity - a free custom workflow activity solution on CodePlex (now also CRM Online compatible) that allows you to execute a workflow for each entity that has a 1:N or N:N relationship to a given entity.
CRM 2011 Copy Utility - a free, configurable plugin that allows you to copy fields from a parent record to all child records in a 1:N relationship.