did you use the old encryption key when you upgraded or rely on magento to generate a new one?
long key like this?
if you did, find out what the old one was from your old local.xml file.
copy the key, then change the current local.xml file by updating that key with the old one.
I think its a security thing, if the encryption key changes then you cant access the orders and things.
Also, doing a version jump that big, I recommend you use the Magento Database Repair tool to compare your 1.7 production database to a clean 1.7 database to check for any problems and fix it