So lets say I have a VERY high ranking website on Google but I want to change the whole site. So everything will be deleted and then done again from scratch. Does this mean if/when there's an update I may get smacked down the rankings?
As long as you won't have a downtime and there will be the same topic-related content on a new version you'll be fine.
You should not have broken links and your site should cover the same topic. If you have further doubts then post this in google webmaster forum.
Your biggest issue will be dealing with setting up 301 redirects for all of the removed pages. I don't think you would necessarily retain your rankings though. Theoretically you would think you should be allowed to redesign your site without disturbing rankings, but it often isn't the case. All of your onpage ranking factors change and you may no longer be as optimized for your keywords. If you are really starting from scratch, the search engines may not like the sudden change in the number of pages on your site. In a recent Google patent they mentioned not counting previous links when a site's content drastically changes. Although they may have patented this, who really knows if it is part of the algorithm.
If you delete everything and start again from scratch it would depend how well you redesign your site. If you were to mess up all of the good point of your current site - title tags, keyword density, etc, etc, then surely your rankings would change. As long as you are careful though you should be ok - just make sure you give it plenty of thought before you go ahead. You wouldn't want all of your hard work to get the site where it is to all of a sudden be wasted.
It will depend upon what changes you will make on your site. If you totally change all the page structures and create new pages, then all your existing indexed pages will result in 404. You will have to set a 301 redirect to each page to the corresponding new page. If you just set a 301 redirect to your index it won't work very well. But it is better than a 404 error. If you change only the graphics and code and do not change the content of your site with not many broken links then you might retain the ranking. But if you delete all the existing content and create a totally new site, then you would probably screw your ranking unless you get a whole lot of incoming links which means the new site is better than the old one. -Neo
The answer to your question is YES. It all depends on the frequency of the call. If you can switch before a crawl you might retain your place. I have switched site platforms from HTML to PHP Based without dropping at all. But my content did not change and the incoming links to my site did not change. But to expect to stay the same (assuming your incoming links stay the same) with a content change doesn't make sense. Have a plan. Work fast. Use 301 redirects. Make sure you don't drop incoming links. Then make sure your new site has all the onsite factors in place. And that's how you stay about the same. I've changed a lot of old Static Sites to PHP based script sites with good success.