Here's a real world example of the 1.4.0 change breaking a merge:
("netdev-2.6" == local clone of kernel.org/...jgarzik/netdev-2.6.git)
[jgarzik@pretzel netdev-2.6]$ git branch
ALL
e100-sbit
* master
upstream
upstream-linus[jgarzik@pretzel netdev-2.6]$ git pull /spare/repo/linux-2.6
Generating pack...
Done counting 3427 objects.
Result has 2510 objects.
Deltifying 2510 objects.
100% (2510/2510) done
Unpacking 2510 objects
Total 2510, written 2510 (delta 2024), reused 0 (delta 0)
100% (2510/2510) done
Updating from 427abfa28afedffadfca9dd8b067eb6d36bac53f to
25f42b6af09e34c3f92107b36b5aa6edc2fdba2f
fatal: Untracked working tree file 'drivers/net/myri10ge/Makefile' would
be overwritten by merge.
EXPLANATION:
* drivers/net/myri10ge/Makefile exists in latest Linus kernel tree,
stored locally in /spare/repo/linux-2.6.
* drivers/net/myri10ge/Makefile exists in netdev-2.6#upstream and
netdev-2.6#upstream-linus branches.
* drivers/net/myri10ge/Makefile does not exist in current branch,
netdev-2.6#master.