You can check which version of Subclipse is installed in the “About Eclipse” menu item (click there on “Installation details” and search for Subclipse). If you see e.g. that Subclipse 1.8.1 is installed, the table tells you it will only work with svn 1.7. So we need a newer version of Subclipse. My first idea was to run an update in Eclipse. But it updated some other software but nothing related to subclipse. Then I notice that the update site I had used to install subclipse was: http://subclipse.tigris.org/update_1.8.x
This means that it will provide minor updates like 1.8.2, 1.8.3 and so on but no major update like the version 1.10.x that we need for svn 1.8. So I added a new update site for Subclipse 1.10.x: http://subclipse.tigris.org/update_1.10.x/
Besides, when try to merge files from branch to another branch, please do merge on the project folder not on the files.