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raksrules: You can check the size of your phone partitions using the app "freespace". For ICS, at least 185MB system partition is recommended. Many people recommend creating your own partition layout using the partition layout tool that is available on XDA. But I got some error with one of the files, so I used the TPT image provided here:
ZTE Blade TPTs
I used the G1-G2v10 stock TPT, given that my mobile was a Gen 1 device. Also download the copy of ICS ROM that you want to flash, along with the latest gapps file.
1. The TPT file, when extracted gives a folder named "image", with many files in it. You just need to copy this folder to your SD card root. ALso copy the ROM and gapps file to your SD card.
2. Power off the mobile and then power on while holding vol + button and menu button. The partition will be modified within a couple of minutes, and will reboot into clockworkmod.
3. FLash the ROM, and then the Gapps. Reboot.
4. Done.
THere is no one shot file that can repartition and install ICS. It is a two step process.
I have not tried restoring an app from GB into ICS. But I don't think there should be any problem. You can reinstall the ICICI app from its site, and opt to restore the data alone from titanium backup. It might work that way. (P.S: Take a nandroid backup, and a Titanium backup; note existing partition sizes and the do the upgrade. Worst case, you will need to repartition back to earlier sizes and restore the nandroid backup & titanium backup.)