Exactly how did you "upgrade" your library?
Did you by any chance IMPORT the old library into the new library? If so that is the problem - NEVER import an iPhoto library into another iPhoto library - it does not work and causes massive duplication
If you did that then drag the new bad iphoto library to the desktop and reload the old iPhoto library into the pictures folder and launch iPhoto - it will open and upgrade the old library - there in NO importing involved
Terence, yes, I just synched with my iPod touch.
Strange phenonomon there: upon plugging in, iTunes will display iPod's capacity (Photos 5.6GB & Free 2.9GB),
but once I hit Sync the numbers will jump (Photos 7.6GB & Free 0.42GB)
This scenario will play out each time I plug in the iPod - but after each Sync iPod still has 2.8GB available under General > About ...
Syncing with iOS devices means that a cache of images resized for these devices is created. That could easily account for the increase in the Library size.
As said above, if space is an issue you can run a Library from an external disk:
Make sure the drive is formatted Mac OS Extended (Journaled)
1. Quit iPhoto
2. Copy the iPhoto Library from your Pictures Folder to the External Disk.
3. Hold down the option (or alt) key while launching iPhoto. From the resulting menu select 'Choose Library' and navigate to the new location. From that point on this will be the default location of your library.
4. Test the library and when you're sure all is well, trash the one on your internal HD to free up space.