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Will the server go down, be updated right away, or will it stay as 1.4.7 until bukkit updates?
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The server will stay as 1.4.7 until Bukkit updates.
That being said, you'll need a 1.4.7 client to access the server so you may not want to update when 1.5 first releases.
(But, if you really want to update, you can always downgrade with
this handy dandy .jar ^_^)