Manual Import of Albums
The problem: The new version of iPhoto does not accept the library format of your older version of iPhoto (also known as bridge burning - I reserve further comment...). Don't panic, though. There is a way to do it manually. Here's how:
1) Use iPhoto's import function to bring in all the photos from the old library.
2) Open your old iPhoto library in the Finder (look in users>pictures>iPhoto Library), then open the Albums folder. Each of the albums appears as a folder, accompanied by a similarly named data file.
3) Select an album folder and copy its name.
4) Switch back to iPhoto, then create a new, untitled album, making sure to deselect the option to "use selected items in new album."
5) Paste in the name of the album in the name field.
6) Open the original album in the finder (list view is easiest). Each of the photos in the album is represented by an alias. Select all of the aliases and drag them to the iPhoto window and drop them onto the album that you just created. A window will appear prompting you to reconcile duplicate photos. Click on the "existing" thumbnail, then select "Apply to all duplicates" and "Import." This will import the aliases and link them to the corresponding photos that you imported earlier.
7) Repeat the above for all albums. Note that if you have different libraries on other hard drives or user folders, you can follow the same procedure in order to create an up to date combined library.
NOTE: In case you are wondering, if you were to choose to go with the aliased copy instead of the old, there is a chance that iPhoto will not process the links and the album will remain empty. Of course, you could simply select an alias, go to the original and copy the set of photos into iPhoto without worrying about step one, but since older iPhoto catalogues have three sets of each photo (the aliased file, the "original " file - in which the JPEGs are more compressed - and the thumbnails) this can be confusing and is more of a headache.