Sorry to hear you’ve had problems, but just to be clear, Contact Form 7 allows the completed form to be sent to *any* email address (e.g. @yahoo.com, @gmail.com, @hotmail.com, @whatever.com).
What the recent update did change was the email address seen in the FROM field of your mail client when you receive the message.
If an email is being sent from your website domain, it should now have a FROM address from that domain. This is because emails are being spoofed by spammers and are being sent from a different domain (e.g. I send you a message from my domain but claim to be sending it from paypal.com). Such messages are being routed into the Spam folder, and so best practice is now to include a FROM email address that is from the website domain. Look at the following setup:
== MAIL ==
From: [your-name] <wordpress@your-domain.com>
Additional Headers: Reply-To: [your-email]
What happens and why:
1. When you receive the message, it will have the sender’s name and be from the “wordpress” email address specified in FROM (Depending on your hosts, this may need to be a real email address (test to see if it processes), and it does need to be @your-domain.com).
2. Adding the Reply-To: [your-email] in ADDITIONAL HEADERS means that you can reply to the sender by hitting the Reply button in your email client.
