What are the problems with merging DB dumps?
If you use Git to version DB dumps and merge dumps from dev. and live, you can also do that with Drupal. But the Drupal DB schema is dynamic, new modules add new tables and some configuration (mainly CCK) changes can add or remove columns or rename tables. Because of this, handling (configuration) changes with DB dumps merge is hard and error prone. That's why alternative methods like Features-driven workflow are recommended to manage (configuration) changes management between multiple environments.

See also The Development -> Staging -> Production Workflow Problem in Drupal and the Code driven development: using Features effectively in Drupal 6 and 7 presentations.