The error message in the status output says everything:
> local dir unversioned, incoming dir add upon update
This means that you had the tmp created in your working copy using mkdir but did not add it to the repository (yet), although you probably already added it locally using svn add . When svn update starts, another tmp directory is issued from the repository, which will overwrite your tmp if you do not fix this problem.
As a rule, try not to work with the same parts of the project in the same branch / trunk with other people, as this will ultimately lead to conflicts of conflict merging unheard of proportions.
The following SVNBook chapters should read:
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