Blair Zajac describes the problem in detail here:
http://subversion.tigris.org/servlets/ReadMsg?list=dev&msgId=243327
Here's the reproduction recipe, from the body of his mail:
svnadmin create repos
svn co file://`pwd`/repos r
cd r
echo "aaa" > a
svn add a
svn ps aaa bbb a
svn ci -m ''
svn ps aaa cccdd a
echo "bbb" > a
% svn diff
Index: a
=====================================
--- a (revision 1)
+++ a (working copy)
@@ -1 +1 @@
-aaa
+bbb
Property changes on: a
_____________________________________
Name: aaa
- bbb
+ cccdd
svn ci -m ''
cd ..
svnlook diff -r 2 repos # look ma, no property diffs
Modified: a
========================================
--- a (original)
+++ a 2003-04-08 22:17:28.000000000 -0700
@@ -1 +1 @@
-aaa
+bbb
Bug
Major