I suppose you could just make the count a member variable and then you could remove the line int count = 0;
to prevent the count from reseting during each update:
int count = 0; // Declare it here or in your constructor
public void update() {
int x = 0;
if (checkPaddle() == true) {
count++;
}
if (count % 2 == 0) {
x = -7;
} else {
x = 7;
}
paddleLocation.y = paddleLocation.y + x;
}