getting the ng-object selected with ng-change

Instead of setting the ng-model to item.size.code, how about setting it to size:

<select ng-options="size as size.name for size in sizes" 
   ng-model="item" ng-change="update()"></select>

Then in your update() method, $scope.item will be set to the currently selected item.

And whatever code needed item.size.code, can get that property via $scope.item.code.

Fiddle.

Update based on more info in comments:

Use some other $scope property for your select ng-model then:

<select ng-options="size as size.name for size in sizes" 
   ng-model="selectedItem" ng-change="update()"></select>

Controller:

$scope.update = function() {
   $scope.item.size.code = $scope.selectedItem.code
   // use $scope.selectedItem.code and $scope.selectedItem.name here
   // for other stuff ...
}