Currently, devtool update-recipe crashes if the update would touch compressed patch files. That is, if the recipe contains compressed patches (e.g. foo.patch.gz) and the user would modify the commit corresponding that patch (or any earlier patch in the patchset causing foo.patch to be updated). Also, devtool is not able to remove compressed patches from the recipe. The solution is probably just to use the uncompressed file names/paths when dealing with the files in devtool.
Fix merged to master: http://git.yoctoproject.org/cgit/cgit.cgi/poky/commit/?id=55a157f4e687de98d78f74e0ec7b4e9883599319