Yes, it will upgrade your version.
BUT, I must warn you. The upgrade option looks identical to a typical install. Be sure NOT to format your home partition, or you will lose everything you got!
There is one other thing.. 7.1 used the ext2 file system, while 7.2 had an option to use Reiser, and 8.0 makes it mandatory. I am not sure how that will react with your home partition.
BTW.. practice good computer usage. Always back up your data at least everytime you are ABOUT to do an install or upgrade. Dont risk your stuff.
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