Version 1.7 is the final version 1 release. Have a look at the changelog to see what has been added, fixed or improved. We will continue supporting this version until at least the 2.1 release, and will issue maintenance releases if and when needed.
Though, there is a 1.8-develop version aswell, will there be a 1.8 before 2.0 ?
Also, do you guys have any idea of when you're about to release 2.0, as in begin/mid/end 2014, and will you guys make it completely backwards compatible ?
No, the 1.8/develop branch will be used for current development of the v1.x train, which at the moment is limited to bugfixing and small functional stuff (mainly omissions).
These will be backported to future 1.7.x maintenance releases.
When v2 will reach beta stage (i.e. when the first beta is released), we will release whatever the current state of 1.8/develop is as a FuelPHP v1 LTS version, which will then be supported for bugs and security issues (but nothing else!) for at least two more years.
There are still some very large components missing for v2, one of them being Orm. It's still to early to tell when it will be ready for beta.
And no, it will not be backwards compatible. It's a new major release, and has a completely differerent architecture, something you can't do without breaking compatibility.
What we will do is try to provide a static facade which is as close as possible to the static API of v1 (see https://github.com/fuelphp/fuelphp/blob/master/static-methods-list-tracker.txt. not really up to date I see), and provide an upgrade guide highlighting the difference, and the changes you need to make when migrating v1 code. We'll try to keep this simple, we hate upgrade work as much as the next guy. :-)
We'll probably make a compatibility package as well, with some v1 bits that will not be included in v2 (for example Image, or not compatible, such as the v1 Auth and Orm packages). That will ease migration of existing applications.