Agreed. I'm not saying the Dropbox approach is the best. It is better than silently deleting content, though.

A different approach would be to add a way to see files that have issues. Similar to how Dropbox shows files that fail to upload.

It's awful but still better than silently deleting.

Maybe it's awful UX but it's the best you can have and it makes good sense, because there is no way Dropbox can support merge conflict for arbitrary file types. You might as well save all the copies and let user figure it out themselves -- user would know much better than Dropbox how to handle the situation.