If you are online then you can directly update upgrade from 7.04 to
7.10without any hassle.

Is there any advantage in upgrading Ubuntu from 7.04 to 7.10
I am using 7.04 and it works fine, except audio.

Why fix something that didn't break yet?

I assume that there are a lot of software updates, security updates, update
in kernel, update in x.org and others ...

Its an easy transition with one click (System>Administration>Update
Manager). It will update all the softwares and then it will upgrade to
ubuntu 7.10

You can look at this site

http://www.ubuntu.com/getubuntu/upgrading

U can even upgrade form 7.04 to 7.10 using alternate cd

After going through the site, I think, the following could be the most
compelling reason to upgrade.

"End-of-life releases have been supported previously but have reached
the end of their support cycle. It would be best for users of these
versions to upgrade as they are obsolete and you will not be receiving
support for these versions, for example no more security updates will
be provided."