Any shimano 7 speed cassette will be fine in terms of quality. If the teeth on the sprockets were snapped. If there's some damage on the freehub body, where cassette slides onto the freehub, that's another matter.

With 8 speed, you'll need a new rear shifter, new rear hub (or wheel, unless you want to rebuild the old rim) and basically the only thing you'll gain is one more "fast" speed - 11 teeth sprocket.