Updating a workspace will get the latest files from the server. After another user has submitted a change you need to 'Update to Latest' within the workspace to incorporate the changes.
To update a workspace within Eclipse, right-click the project and select 'Team | Update to Latest'.
The update will launch the Update Preview Dialog as described in the section called “Update to Latest”. If someone else has edited a file which you are working on then the Resolve Tool will open allowing you to merge the changes. This is described in the section called “File Merge Tool”.