What’s the best way to go about updating WordPress plugins when using SVN and multiple environments?

It’s a bad practice to use version control for site deployments/updates. Consider using a deployment tool which uses SVN like Capistrano. Start Googling around and you’ll articles like this one.

Advantages of using Capistrano

  1. Easy deployments (more error proof than vcs deployments)
  2. Easy rollbacks (maintains previous versions of your codebase)
  3. More secure (doesn’t expose a .git directory for example)
  4. Zero downtime (doesn’t over switch until all the files have been downloaded)

Mark Jaquith, one of WordPress’s lead developers talks about this in a WordCamp.

Update:

This question should help with deployments in general and tree conflicts happen from time to time when deploying with svn. You should read the following chapters of the svn book if you really want to get a handle on this issue:

  1. Dealing with Structural Conflicts
  2. Resolve Any Conflicts

Also, be aware of this security concern when deploying with svn.