I have installed Free BSD 7.1 an would like to upgrade to 8.0 using theupgrade option under sysinstall. Is this posible?
You may be able to use freebsd-update, although I am not entirely sure if it supports CURRENT releases. Check out the man page for more details.
When making such a large jump, as from 7.1-8.X I would recommend using the cvsup route and upgrade from source. Get the source code then do the buildworld, buildkernel, mergemaster, installkernel, installworld thing (see the handbook for details). Ensures a fresh, clean build and cleans out old libraries.
Are you in any particular hurry to upgrade to 8.0? Maybe you don't need to.