If you're talking about your own development working copy, I expect that it will work OK.
Reviewing the compatibility notes at http://subversion.apache.org/docs/release-notes/1.7.html#compatibility:
"Older clients and servers interoperate transparently with 1.7 servers and clients. However, some of the new 1.7 features may not be available unless both client and server are the latest version. There are also cases where a new feature will work but will run less efficiently if the client is new and the server old."
This leads me to believe that a 1.7 working copy and a 1.6 server should interoperate without any problems, but we have not tested this configuration. If you would like to upgrade, I would suggest that you test on a separate checkout first.
Tim, they mean old server<->new client and old client<->new server compatibility. Old client<->new client does not work, unless workspace format is preserved.
Also, the statement relates to the command line cilent, not svnkit. If features available only in working copy 1.6/1.7 are used on the server side, svnkit checkout will fail.
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