I also used SVN before to update my wordpress installation. Up the working copied will get messed up very quickly with all the manual updates or files created by plugins.
I would always recommend to use the update functionality of wordpress if you only want to step from one tagged version to another one.
Although, I also use SVN for a local copy of wordpress to be able to quickly test my plugins in some old version real quick. I use Eclipse to switch from one to another tag and until now it worked out. But you’ll never know.
UPDATE:
I just tried to switch a clean checkout of 2.9.2 to 3.0.1 which looks like it is working, but I can only see the backend and not the frontend of the default single blog.
UPDATE:
What even the debug mode doesn’t tell me: As the default pre WP 3.0 theme is no longer available I just have to switch to the new “2010” theme. Now everything is working.
So switching does work, but as I said before, your working copy usually get’s messed up with a lot of files that might cause some problems updating your WP copy with SVN switch.