Whatever is possible to migrate will be migrated. Nothing will be (should be) altered in your contact list, this includes block/allow...your contactlist is stored on MSN/WLM server. Same goes for custom content, the upgrading process of messenger will migrate those over to the new storage location.
About the vulnerability:
quote:
Originally posted by http://blogs.technet.com/msrc/archive/2007/09/12/technical-tips-and-insights-on-ms07-054-and-kb941835.aspx
The vulnerability is specifically in the webcam protocol and is only exercisable during an established videochat session. An attack can’t happen unless you accept a videochat invitation from a malicious user.
And by default you can only videochat with people on your buddy list. However, if you accept a webcam videochat invitation from a malicious attacker, you can be exploited even if you don't have a webcam yourself. We support one-way video chat, so until you upgrade to either 7.0.0820 or 8.1, be especially cautious about accepting webcam videochat invitations.
I do believe Contact Information in Plus! Live is somewhat different from Plus!3, here is what it looks like: