This seems to be causing endless SVN tree conflicts on certain buildbots. I guess what's happening is that we run the test suite, and the test suite does import lit.llvm and that creates a .pyc file in the source tree. Then, svn gets confused when doing an update and refuses to update it because it thinks there's a conflict.
I don't know why this isn't happening for other lit folders (e.g. lit/formats), but it definitely seems to be the problem. I don't know of a better way to fix this then just disabling pyc generation, which I think this does the trick.