We had a problem similar to this a while back and actually proposed a new feature for Fabric, but the developer we spoke to suggested this instead.
import getpass
password = getpass.getpass('Enter SVN Password: ')
run("svn update --password '%s'" % password)
This will prompt you for a password when the time comes for fabric to run this command.
I believe that will display your password in the fabric log, however, so a better option would be to get SVN to prompt you for the password and echo the password into it.
run('echo %s | svn update --password' % password)
I don't use SVN though, so I'm afraid I'm not sure if that is possible. I hope someone else can help there!