you don't need to overwrite. Just extract it wherever you want. Your saves and other files are all stored in a different folder from the game folder.
Even if you deleted 0.7 off your computer, you'd still have all your saves. 0.8 won't overwrites your 0.7 save unless you continue playing on your 0.7 save.
On the topic of continuing or not. You can just finish playing on 0.7 and then go to 0.8. 0.8 changes a lot of stuff on the map so I can't exactly tell you if continuing playing a 0.7 save on0.8 wouldn't cause issues, but you can continue playing from any day you wish if you start a new play on 0.8.
Basically EVERYTHING is saved outside of your game folder, how many days you've played, if you've beaten the game already. You can start a new version with the sandbox already unlocked, basically. Unless you go into your appdata folder and delete all the saves