i find the idea of an SMS installing an update, unlikely. However it could be used to control features.
It is obvious that phones with American OSes (Android, iOS, Windows) are subject to anything the American Government wants via the Patriot act.
This could mean a backdoor. Or it could just be pushing out custom updates to target phones. Or both as needed.
My guess, after seeing this, is that they can, at the very least, send a silent MMS that installs whatever spyware they want. (Without having to directly involve Apple/MS/Google) which would be the smurfs mentioned (Obviously with versions for different platforms).
The question I would like to see answered is how vulnerable phones that are not covered by the Patriot act are.
It seems likely they are less vulnerable, given the way they seem to be being eradicated. Symbian - bribed by MS. S40 - bought by MS. BlackBerry - being marginalised by everyone. (Given it isn't hard to make Android apps run on them, why?)
As for what the Smurfs can do, I'm sure it is quite possible to fake being off, record while offline, video without any indication, both cameras probably.
And the issue isn't that they can do this in America, but that they can do it worldwide. Within a country having access to the mobile network itself would allow a lot of monitoring. (Location and calls at least.)
It wouldn't surprise me if it were possible to program a SIM to silently answer calls from certain numbers, for surveillance. (My IP phone has that facility built in).