We are planning to move the site from Joomla! 2.5 to Joomla! 3.x. Will the template be automatically updated ? If not, Is there a workaround to proceed ?
After joomla update You will have to install template and extentions for a respective joomla version. It will not happen automatically. Some of the extentions may require reconfiguration, so I advice to use a backup of the site to do this.