We are trying to use resolver on upstream. It is not working for some reason. We are using nginx 1.6.0. Supposedly the feature should be available on 1.5.12.

When we try to use it, It always give us an error. nginx: [emerg] invalid parameter "resolve" in... And when I checked the source code, it doesn't look like the feature was in there.

According to upstream documentation it should work like this:
resolve
monitors changes of the IP addresses that correspond to a domain name of the server, and automatically modifies the upstream configuration without the need of restarting nginx (1.5.12).
In order for this parameter to work, the resolver directive must be specified in the http block. Example:

http {
resolver 10.0.0.1;

upstream u {
zone ...;
...
server example.com resolve;
}
}