Upgrading from sudo 1.7.4p6 to 1.8.6p7 on OS X 10.7.5
The command sudo tar -C / -zxf sudo-1.8.6p7-1-osx7.tar.gz should be working, assuming you are in the same working dir as the downloaded file.

You could add --overwrite to the command, but this may have unintended effects...

I don't quite understand your desire to replace the stock sudo with this seeming random, and unsupported 'update'. If this goes wrong, you may be left without sudo; or you could break more than sudo.

You could uncompress without the -C /, and manually move the files into position.