Smart Objects not Updating in PS CC

I'm designing elements in Illustrator CC and then copy and paste them into PS and select  Create Smart Object. I've also tried saving the AI element and then placeing in PS as well. Then if I double click the smart object to edit it, it will open up in illustrator and I make a change then save and close and when I re-activate PS the change does not apply.
Did PS change something that I'm not aware of? This is a huge pain in the A**. Anyone else having this problem?

I was actually just working in Illlustrator. Selecting the vector object and then select PS and Paste. I'm then asked if I want this to be a smart object. I select yes and it adds the object as a smart object layer. If I double click the layer it opens it in Illustrator, I make a change, save it and close it. Then back to PS and the smart object doesn't update.
I haven't used Place Embedded or Place Linked. I don't understand what those functions do. It's just not how I'm use to working.
Actually I have a large PSD doc. Inside it is a group of objects that I have turned into a Smart object. Inside that (by double clicking) is an AI file that is also a smart object. When I open that up to make a change it won't update once I save and close.
I have tried a coulpe of test with placed Linked and Embedded objects and I can't get those to work either. So what ever the change was. So far not really liking it.

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