Given the following code:

public void UpdatePerson(int id, string name)
{
    Person p = peopleRepository.Get(id);
    p.name = name;
    peopleRepository.Update(p);
}

One answer would be (using a pseudo mocking framework):

Person p = new Person();
Expect.Call(peopleRepository.Get(0))
        .Returns(p);

Expect.Call(peopleRepository.Update(p));  

...  

service.UpdatePerson(0, "MyName");

Other approach would be (using pseudo coding again):

Person p = CreateAndInsertToDB();
service.UpdatePerson(p.id, "New Name");
 
FlushAndRecreateTheSession();
 
Person updated  = GetFromDB(p.Id);
Assert.Equal("New Name", updated.Name);

What would you do, and why?

(I'm tagging that also under altnetuk as it has been inspired by a session around test-granularity, mocking frameworks, etc.)

Usually I won't just link to another's post, but this one is a very good introductory level Unit Testing 101 Article, covering basics of the idea, and basic of nUnit and Rhino.Mocks.

A must read for Unit Testing newbies.