Comment on WordPress SEO Theme Developer by SEO Dave.
That’s how WordPress works with all themes and plugins, if you’ve made customizations either make an offline copy of what you customized and upload using FTP after you update using the WordPress updater or upload the new files via FTP and don’t upload files you’ve customized.
I have loads of websites with customizations, most are single file customizations (the custom-widget.php file or the test.js file) which I’m updating via the WordPress updater and reuploading the customized file. For sites I’ve added multiple custom files (banner sets for example) I’m using FTP.
Since I own 100 domains and most run under WordPress rather than have 100 offline copies of WordPress, themes and plugins etc… for each site I have a folder for each domain that includes only the custom files:
any customized files for Stallion/plugins
All in their relative directories.
I also have one folder that includes the latest version of WordPress with all the plugins and themes (Stallion, TwentyEleven and TwentyTen) I use so it’s easy to create a new site, upload the latest version of WordPress, plugins and themes via FTP if I don’t want to use the WordPress built in installers.