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Hi,
Yes, part of the upgrade to EPi CMS is the requirement to use the new media system, which is Blob-based. Since you're 7.7, you can download the source code version of the VPP migration tool to be used against your version (since the RTM version requires 7.5.394.2) - http://world.episerver.com/download/Items/EPiServer-CMS/vpp-migration-tool/
I just Upgrade to Episerver 7.7.0. Now when i got to CMS edit i can see a tew menu called Media but i cannot see my uploaded files (that are stored in disk in upload folder). So my question is do i have to Migrate VPP-based files to the new media system after upgrading the episerver or is there anyway i can live with old legacy files system with newer version of episerver???