The SVN 1.8 server code can serve a repository formatted by SVN 1.6. That said, you don't get all of the benefits. You can do the "svnadmin upgrade" but that only covers some of the behaviors. In order to take advantage of all of the SVN 1.8 (and/or SVN 1.9) enhancements you will need to "svnadmin dump | svnadmin load" each and every repository which you want the new behaviors. Clearly with TB of data in each repo you're going to need a huge amount of storage. It is possible that the storage required for the repositories formatted for the newer releases of SVN could be less but unlikely to be hugely less.
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