I think you guys are arguing the wrong thing here.
The spell says:
When laying your hand upon a living creature, you channel positive energy that cures 1d8 points of damage +1 point per caster level. Since undead are powered by negative energy, this spell deals damage to them instead of curing their wounds.
The argument you should be having is whether the additional healing added by Augment Healing is addition positive energy, or simply a normal healing spell in the hands of a focused healer (potentially implied by the 4 ranks of Heal as a prereq).
If it's the first, then clearly the damage increases. If it's the second, you could argue it does increase for the same reason the healing increases: the healer knows where the healing/damage is needed the most. Conversely, you could argue that because Undead can't be subject to critical hits, the cleric wouldn't be able to use his increased knowledge of healing to do more damage. Just some food for thought.