Yes, the update from old versions is support, thought for 1.8, which is quite ancient, you need to install the old phpgw API, see here
That is a hard question, we try hard not to force you to update customized eTemplates on every release-update, thought 1.8. is pretty old …
No, 1.8 will not work with a current PHP version!
No, our recommendation is to use the latest release, and always install the newest releases, to minimize the things you have to change. Skipping many versions, is always a hazzle
We (EGroupware GmbH) offer to support you in updating to the current version, thought the effort depends on what and how much you changed in the old version: just eTemplates, own themes or even own applications …
Ralf