Always, Backup before upgrading OS or Encryption software.
Install PGP Desktop 10.1.2 update first, then osx 10.6.7 update. In the past(10.6.4, 10.6.5) users had issues with updating from Apple's Software Update function built into osx and recommend using Apple's Combo Updates (downloaded from apple's site) instead. I didn't have any issues upgrading from 10.6.6 to 10.6.7 using software update, i had pgp dt 10.1.1 installed at the time with a WDE encrypted boot disk.