You can upgrade your installation, even without the repositories, and it's easy:
Just put in a CD of the next version, 8.04, and the update-manager will ask if you want to upgrade. From 8.04 LTS you could then upgrade to the next LTS, which is 10.04. So it'd be only two upgrades.
You could also just stick with 8.04, since it's supported until April 2013 (on the Server).
The upgrade will probably work perfectly, and in any case it won't break anything. None the less, a fresh installation might give you chance to review your package selection, it will give you a cleaner system (very slightly improved stability) and, most importantly, if you have a good back up, doing the installation is super easy.
I can't decide for you if you want to do a new installation, but whatever you do, you won't break anything, it doesn't really matter.