It depends on the school. If you applied their last year they may have saved your information and may refer back to it (but I don't know.) I would guess they put little emphasis on your previous app, but they will likely look at how you have improved since then. For the schools that you didn't apply to the previous year they cannot see your first app (unless I'm mistaken...)
I doubt they take the time - they get thousands of applications.
Im not sure how AMCAS is but the texas application has a specific section for re-applicants, with a text box to explain how this application differs from previous years, so im guessing they dont look back on previous applications.
A former adcom told me that they do review your previous application to their school. I don't know if they would have access to your previous application if their school wasn't one that you originally applied to, but yes, if you are re-appling to a particular school, they do review it.
i know some schools at least save your app from last year (suny upstate has sent all their correspondence to last year's address... ugh). but, i doubt they consider your old essay when evaluating your new app. some schools have advisors who can look up your old application and tell you what needed improvement (again, suny upstate). so, keeping your application could be good in that sense.
When I re-interviewed at University of Cincinnati, the interviewer had not read my previous personal statement and seemed to know nothing about (nor care about) my previous application.
That said, definitely rework your PS. I threw my old one out and started from scratch, because obviously my "packaging" of myself wasn't working and didn't get me into medical school, so I felt like I had to try something different. So far it's paid off greatly (compare my 2005 vs. 2006 mdapplicant profile; nothing changed other than PS and timeframe).