Too many Ubuntus

Is updating from Ubuntu 10.4 to 10.10 like Vista to Windows 7, or is it just a large update pack? It seems really inefficient to require clean installs but that is the impression I get from your post.

I use Fedora myself, but Ubuntu's wiki should have the details: https://wiki.ubuntu.com/Releases

As for fixing GRUB vs. clean install, the main thing is that I don't want you to get left at GRUB's command line due to GRUB not being able to find Ubuntu's root directory. If you still want to pursue the fix GRUB (if necessary) option, then these directions should work: https://wiki.ubuntu.com/Grub2#Recover%20Grub%202%20via%20LiveCD .

Note that you'll have to reboot in between deleting /dev/sdb5 and growing your current sdb7 + following those directions. Then instead of sdaX, it should be sdbX where X is the partition number of sdb7 if/after it is renumbered. The grub-install line should point to the hard disk that the BIOS gives priority to during boot.

To summarize the major steps for the fix GRUB2 option:
1. Make sure /etc/fstab uses UUID to mount /
2. Reboot to Ubuntu Live CD or another partition manager. Delete /dev/sdb5 (and possibly also /dev/sdb6).
3. Reboot so /dev/sdb7 and /dev/sdb8 get their new number.
4. Go back to Ubuntu Live CD or that other partition manager.
5. Move and/or resize your remaining Ubuntu's partitions.
6. Restore/fix GRUB2.

As you can see, doing a clean install has less steps so there are less possible things that might go wrong.

I like the sound of your second option. It would work like a separate Harddrive, right? The space is still usable though, so until I need room for a 300 GB file or something, I do not see any problems with it.

What happens if I do not have it mounted automatically during boot? Does it not load for any OS or does it just take a little longer when I want to access something (for the first time on that power-on)?

I right click on the unallocated space and select "Format to", but it brings up a long list of types I know nothing about.

It'd be a separate partition... When everything is setup, accessing it is very seamless.

To illustrate, here's what you could do:

>> mkdir /home/chris/data
>> mount /dev/sdb5 /home/chris/data
or
>> mkdir /mnt/data
>> mount /dev/sdb5 /mnt/data
Or use whatever directory that you want. And you can access anything stored on that partition in the specified directory.

If it doesn't get mounted automatically at boot, you'd have to manually mount the directory to your specified folder. If you let the system automatically mount the partition when you access it (via Nautilus or another file manager), it would usually get mounted at /media/xxxxxxxx (or /mnt instead of /media) where the x's are some randomly generated sequence of hexadecimal/alphanumeric characters. So it would be different every time.

Format to ext3 or ext4. (Personally, I'd format to ext4.)

Could I back up my current Ubuntu, pop it in a safe spot, format all of my un-used partitions and merge them into one, reinstall Ubuntu, and then restore my files and settings?

The other posters covered this, reiterating.. All personal settings should be saved at /home. Save a copy of everything you changed in /etc so you can easily reapply those changes (if necessary) later on.

Personally, I'd reformat that /dev/sdb5 and make it a new /home directory (transferring the current /home over -- most importantly all hidden files+folders). Then when you update Ubuntu or even try other Linux distributions, most/all your settings should be transferred over -- as long as you specify that partition as /home during installation. Also, all data you keep on /home should be safe because the partition won't be touched during install.