Can I update my jailbroken iPhone to ios8?

I don't know what the consequences are if there are any… I know how to upgrade but will jailbreak still work after?
So should I?

Nope. The jailbreak won't work after the update. You have to jailbreak it again after updating. Best thing to do is to wait for a jailbreak for ios8 (currently there's like none) update, and then jailbreak.

Yes you can update, but you will need to use the "Restore iPhone" method instead of "Update iPhone" method. You can always make a list of your cydia tweaks and apple apps by using AppInfo from cydia and email the list to yourself. Also you have the chance to backup all apps in iTunes.

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