I found my answer. I hope this can help others with similar confusion....
We do a ton of LDAP lookups here and this has always been a question.
"This attribute is not stored—it is a computed back-link attribute." http://msdn.microsoft.com/en-us/library/ms677943.aspx
The interesting scenario is that if you add a user to 50 new groups, then ask if the user has been "updated" via the modifytimestamp attribute of the user, you get "no" as the answer. To me, the answer is yes, the user has been updated, but I guess that is just me....
If you ignore the modifytimestamp of the user and just ask for the groups (memberof), you do get the correct answer. So, now I know that you cannot depend on the modifytimestamp of the user attribute to detect if the user's group membership has been altered.