For a while now (not sure when I first started noticing this, but am running build 1119 on linux) I have seen that sublime merge does not respond to changes to open repositories on the file system.
It is possible to get an update by changing to another branch and back again and sometimes to get a partial update by viewing another commit and then clicking the unstaged pseudo commit in the history pane (for example, if merge was see a change and the change is reverted on disk via an editor, viewing one commit and then back again shows <contents unchanged> for the relevant file rather than not listing the file at all as it should).
The only way to consistently get a clear view of the changes in the working directory is to close merge and restart it. Without this it is not possible to stage changes, making merge essentially useless at this stage.