You can upgrade a package with pkg upgrade <pkg-name>. Packages are usually taken from a repository updated quarterly. You can look at /etc/pkgs/FreeBSD.repo to see. Ports are updated far more frequently and this is something that can cause a problem. For example, pkg A uses libA, but then the latest port uses lib2A, so it won't install. If you remove libA it turns out there are 4 other packages that need it too.
While I won't recommend mixing packages and ports, I have found, that for the packages I generally use, if I change using quarterly packages to using latest packages, I run into fewer issues and can generally, if I run into something like what I described above, I can usually fix it (mostly by removing the package and reinstalling the package from ports.)
If changing packages from quarterly to latest, don't use /etc/pkg/FreeBSD.conf, create /usr/local/etc/pkg/repos/FreeBSD.conf. You can copy the existing /etc/pkg/FreeBSD.conf and change quarterly to latest.