It is by no means obvious but you can just simply upload a file with the same name and it will create a new version.

Hi Ben, I noticed that you can upload a file with the same name, but our client don't want to rename the files they're uploading because it is quite the extra work when updating a lot of documents. WIll this function be added again? Or do we need to create this function by ourself? 

As far as I am aware there are no plans to add this functionality. I can definitely pass the feedback onto our UX team and they might prioritize it if they feel there is a need.

I'm not 100% sure but I can can try to answer your original question of why it was removed. I believe it is because it is not very common that people store their versioned documents with different file names, but rather they use a document management system or the inbuilt versioning in Word or similar products. Then the next reason is to push a better user interaction with drag and drop rather than having to click through a bunch of menus and dialogs.

So I'm afraid that if you really need this functionality now, then you'll have to develop it yourself. Let me know if you have any questions about how to do that.

Ok, thanks for the reply. Haven't really looked in to extending the UI in 7.5 yet, but is there a possibility to hook in to the "menu" of a file and add our own "Create new version"?