I get the same corrupt error message when trying to use the simple upgrade link in the Package Manager. I have 1.0.7. Tried uninstalling the packages in reverse order (only 2 mods, User Email System and Ad Management), but the Ad Management uninstall fails on Modifications.english.php and index.template.php. Restored my backup forum files and tried downloading the 1.0.8 update and then uploading it in Package Manager, but got the corrupt file error.
I did some minor cosmetics tweaking of the default theme files, mainly index.template.php to add include files at header and footer for my own ads (ad management not what I'd hoped for) and additional row under forum title, changed the default button set, etc. Does the 1.0.8 update only work with an untouched default theme?
Nevermind - I figured it out. I'll spell it out, in case it helps others...
I followed the SMF Upgrade instructions in the Online Manual
and sucessfully upgraded to 1.0.8. I backed-up the folder, then downloaded the upgrade zip, copied the extracted files to my forum folder, ran upgrade.php from the browser, deleted upgrade.php. no errors, no worries! This worked out well with the mods issue, afterall. It actually left the mods in the Package Manager like they were uninstalled, so I was able to delete them and add the mods I wanted.
Fyi: The old User Email System mod gives an error if you try to reinstall it after the upgrade. You need to delete it and download and install the newly updated mod, for 1.0.8.
Other than that, I just had to readd the code to the few pages where I tweaked the look-and-feel, my modified stylesheet, and replaced the button set I chose. I hope the upgrade later-on to the gold version of 1.1 goes that well!