Same here... upgrading 7.04 to 7.10 workaround remove the /etc/apt/apt.conf.d/proxy file
sudo mv /etc/apt/apt.conf.d/proxy /etc/apt/apt.conf.d/proxy.old
modified the /etc/apt/sources.list as explained from Claudio Satriano
HTH
Same here... upgrading 7.04 to 7.10 apt.conf. d/proxy file
workaround remove the /etc/apt/
sudo mv /etc/apt/ apt.conf. d/proxy /etc/apt/ apt.conf. d/proxy. old
modified the /etc/apt/ sources. list as explained from Claudio Satriano
HTH