A. Yes, the PHP version changes. (and other things as well)
We've released the new version of XAMPP 1.7.7, including:
FileZilla FTP Server 0.9.39
Tomcat 7.0.21 (with mod_proxy_ajp as connector)
+ Apache 2.2.17
+ MySQL 5.5.8 (Community Server)
+ PHP 5.3.5 (VC6 X86 32bit) + PEAR
+ XAMPP Control Version 2.5 from http://www.nat32.com
+ XAMPP Security
+ SQLite 2.8.15
+ OpenSSL 0.9.8o
+ phpMyAdmin 3.3.9
+ ADOdb 5.11
+ Mercury Mail Transport System v4.62
+ FileZilla FTP Server 0.9.37
+ Webalizer 2.01-10
+ Zend Optimizer 3.3.0
+ Perl 5.10.1
+ Mod_perl 2.0.4
+ Tomcat 7.0.3
Yes many differences.
B. We would need the detailed error messages for anyone to try to help you. Despite my avatar, I do not possess 'Remote Vulcan Mind Meld' to detemine what might be wrong with your scripts/programs.
C. I have to ask - why did you upgrade???