where in admincp do i backup the files?

Just log into your server via FTP and download all the files off it.

what about the templates in admincp?

they are stored in the database, so backupping your database also includes the backup of languages/phrases/templates/style informations etc. :)

I was thinking of just backing everything up then re-uploading them after the upgrade, but it seems to me like i might have to add new mods with the 3.8 version & edit the templates again

Templates you have edited will stay edited after the upgrade. However, you will have to apply the mandatory changes to them, otherwise you will lose functionality.

Im not sure what you mean

Ok you have templates you've modified from modifications or whatever. Those will not change during the upgrade.

vBulletin 3.8 has template changes. If you have modified lets say "SHOWTHREAD" for 3.7.4 and vBulletin 3.8 made changes to "SHOWTHREAD" you will have to make those changes yourself.

On the flip side, if you didn't modify the template, and it has changes for vBulletin 3.8 it will automatically be upgraded.

so basically i have to rack my brains to find out what templates ive manually edited, then re-edit them after the upgrade?

The vBulletin Admin CP will let you know which templates are outdated when logging in. Your edits are not affected. You just need to make the changes that vBulletin requires.