Hello everyone --
Just a couple of notes on my experience in upgrading from 1.7.7 to 1.8, in case it helps anyone.
This time around, when I went to set the MySQL password through the panel (http://localhost/security/), it did not update the configuration files automatically.
I was baffled for a bit, but was able to resolve everything once I followed the instructions here:
I had to manually set the cookie preference as well; it did not go through from the security console.
Lastly -- and I have never upgraded XAMPP before, so maybe this is standard, I don't know -- when I unistalled 1.7.7, I requested for the databases to be saved. Everything worked great, but all priviliges were revoked from users other than root, so I had to reset them through phpMyAdmin (or the command line would work too, I suppose.)
So... maybe someone will find this useful.
I am on Win 7 32-bit Home premium.