Still on Smalltalk, here is a Usenet thread on managing the image file during development using the Dolphin Smalltalk implementation.
Some quick Googling didn't turn up anything obvious on this for Squeak. Is Monticello the way?
Some people also use CVS. Out of the "box", Squeak also keeps previous versions of method sources.
Monticello is the version control system of choice for a lot of Squeak developers, yes. It's used for many of the projects listed on SqueakMap. There's a shared Monticello repository called "SqueakSource" used for collaborative development on several projects. Check it out, it's pretty slick.