UPDATE and Indexes and Performance

Does PG (8.1) ever use existing indexes when executing an UPDATE?

I've got some tables with millions of records and whenever I update a
column that involves most or all the records the EXPLAIN command seems
to indicate that it isn't using the pre-existing indexes. This result in
a slow update, which is further slowed by the presence of indexes. So
when doing a large update should I just drop the indexes first, or is
there some good reason to keep them?

Thanks,
- Bill Thoen