Upgrading from 2.3 to 2.7.1 using the database export method worked without a hitch for me. Even the new option WP 2.7.1 gives to import your uploads folder went great!
How did you end up upgrading David?
I think conerc is referring to the maximum file size of an image that is uploaded and posted.
Some people don’t have image editors, they just want to try to post Gigantic photos on blogs.
I also had this same problem.
HandySolo is correct in saying the permalinks had been changed.
I’m using the Advanced Permalinks plugin which allows setting your permalinks to use only the post title or id (%postname% etc).
Category pages don’t like this for whatever reason, so at least try and add a category in there for good measure 🙂