diff -r 73c918c71300 -r cb6107f78b92 mercurial/commands.py
--- a/mercurial/commands.py	Sat Mar 24 02:47:33 2007 -0500
+++ b/mercurial/commands.py	Sat Mar 24 02:57:27 2007 -0500
@@ -2255,7 +2255,8 @@
         def handle(xlist, dobackup):
             xlist[0].append(abs)
             update[abs] = 1
-            if dobackup and not opts['no_backup'] and os.path.exists(rel):
+            if (dobackup and not opts['no_backup'] and
+                (os.path.islink(rel) or os.path.exists(rel))):
                 bakname = "%s.orig" % rel
                 ui.note(_('saving current version of %s as %s\n') %
                         (rel, bakname))