Hey Vickie,
I also use plenty of variation listings in my store, as many of the fashion accessories I sell are offered in more than one color.
Even when I was using single item listings, but with multiple quantities, I realized that relisting would not properly track my inventory count. (Fortunately, I learned this before I inadvertantly sold an item I no longer had in stock.)
So, to answer your question...in my experience using the inventory count feature on variation listings through Auctiva works just PEACHY, as long as you utilize the "good til cancelled" duration on your original listing form. Since I began using GTC, I have yet to have to perform a recount of my inventory on hand.
I have a couple listings that are seasonal, such as winter gloves, that I have wondered how I may handle, when warm weather returns. Should I cancel the listings, and then have to do an inventory recount, when I relist? Or should I just let the variation listings continue to relist as store inventory throughout the year...since its only .20 cents per month? The glove inventory I had last year, I just left them up all year. The few remaining stock I had, did sell out earlier in the season.
Presently, I am leaning towards just letting them run throughout the year. Sales on those items may be nill...on the other hand, if anyone is looking for gloves in the warmer months, I'll be one of the few places you can buy them. :-)