one thing you could do is:
* Always export your database to sql file in development time.
* Convert the sql file to database file either in an MSBuild Custom task or at any convenient initialization step when your application starts up.
* To import the sql file back into a database file, you could use C# similar to:
string sql = System.IO.File.ReadAllText(SqlFile);
SQLiteConnection.CreateFile(DatabaseFile);
string ConnectionString = @"Data Source=" + DatabaseFile;
using (SQLiteConnection cn = new SQLiteConnection(ConnectionString))
{
using (SQLiteCommand cmd = new SQLiteCommand(sql, cn))
{
cn.Open();
cmd.ExecuteNonQuery();
}//cmd
}//cn
This way you can just keep you sql files in SVN, allowing you to have editable mergeable files
and just generate your bin db files on the fly either in the build process or when the application starts.
If you chose to build the db binary file in your application start, you could also make it an in-memory database in case your application did not have enough permissions to write to disk. your connection string should then be:
Data Source=:memory:;Version=3;New=True;