Back in old Subversion, the scenario of "Updating to a newer changeset (on the current branch) while there are Pending Changes in the workspace" was handled very smoothly and seldom caused any problems. (Sure, conflicts can arise but they are usually minor since we are on the same branch.)

I'm aware that it's recommended that each developer works on their own child branch. Nevertheless, this situation comes up, for example when two child branches are being concurrently merged back to the parent. Also, the Plastic team has already put some work into supporting this scenario:
http://codicesoftware.blogspot.com/2012/02/working-on-single-branch-update-merge.html
"While our recommended pattern is definitely branch-per-task, sometimes you’ll find yourself sharing a branch with another developer or even the whole team."

Unfortunately, the current handling of this scenario is not optimal. There are (at least) 3 methods for updating the workspace to the latest contents on the current branch, and the third method differs from the first two in ways that are hard to predict:

(1) Pressing "Update workspace" button on the Items view.
(2) Switching to the same branch.
(3) Pressing the "View new changes" button that appears in the Pending changes view when there are newer changesets.

The setting "Other Options - Behavior when trying to switch / update with changed items" / PendingChangesOnSwitchAction controls some aspects regarding the behavior of method (1) and (2). When using the "No-Checkout" workflow, it has been recommended to choose the option "Allow" or "Allow, showing a warning" for this setting. However, in my experience this does not work well at all. This setting only affects Changed files and it causes several problems, even potentially blocking a subsequent Checkin! On the other hand, the default option "Do not allow, show an error" will prevent any attempt to use method (1) and (2) when there are local changes. Also, if there is any checked-out items, method (1) and (2) will be disallowed regardless of settings.

(Details: If I switch/update with locally Changed files with the above option "Allow, showing a warning", I get the Confirm Update dialog. If I then choose to continue with the Update, I get the Update Results dialog. Here, my Changed files are listed as "not up-to-date" even if the new changesets on my branch contained only changes unrelated to these files! And if the new changesets on my branch did contain changes related to my changed files, I may even become unable to Checkin because of an error "parent revision is inconsistent with the loaded one"! Also, if I use "Update forced" I would lose my local changes.)

Method (3) is only available if we have activated "Look for newer changes in the repository" under Options in the Pending Changes view. This method is working much better, since incoming changes are handled by a sub-branch-merge.

(NOTE: When cloaking is active, the method (3) will always cause a Merge instead of an Update if there are newer changesets, potentially leading to unnecessary "sub-branching" even when there are no changes in the workspace!)

My suggestion is to:

• Completely remove the setting "Behavior when trying to switch / update with changed items"
• Handle "Switch" and "Update Workspace" (method 1 and 2) very similar to "View new changes" (method 3).

This would make the handling much more consistent. Both Changed and Checked-out items can then be merged, and a trivial switch/update can be performed if there are no conflicting files.