If I recall rightly you should be able to update the 7.10 by just inserting the ubuntu 9.xx version.
It would pop up a message about doing a distro upgrade.
Alternative method would be again in ubuntu 7 to configure apt-get to use the CDROM as a local repository and update from it.
you would need to change the apt sources file to use the CD.
you can look at these pages whioch offer examples to follow:
There is lots of inmformation about performing an upgrade.
Using an ISO image instead of a cd also works: http://www.munz.li/?p=10