Fixed in 9fe7e6acf525.

This was confusing to me as well when I first came to hg. +1 on mentioning it 
somewhere more obvious, probably in the message about resolve, eg change that to 
read:
use 'hg resolve' to retry unresolved file merges or 'hg update --clean' to discard 
the merge

Sometimes, you just want to blow away a merge and start over. This is a rough
transcript of what happened to me after some time away from Mercurial:

> hg pull
(+1 heads)
> hg merge
2 files unresolved
use 'hg resolve' to retry unresolved file merges
> hg revert --no-backup --all
abort: uncommitted merge - please provide a specific revision
> hg revert --no-backup --all -r tip
> hg parents
[ two parents listed ]
> hg update -r tip
abort: outstanding uncommitted merges
> hg update --help
 -C --clean  overwrite locally modified files (no backup)
> hg update -C -r tip
0 files unresolved

The UI here is lacking. At the very least the abort from update should mention
-C. The abort from revert could also mention it, but that's debatable.

My suggestion is adding the following line of output below the abort messages:
to throw away the merge completely, use 'hg update --clean'