Are you redeploying the same package using 1.7 version that you had deployed using the previous version fo Azure tools? The problem, I suspect, is that the hosted service you are deploying to has an existing deployment containing a Local resource called
"UploadStorage'. This resource is missing in the new package which you are deploying to the same hosted service. Can you check if this is the case? One thing which you can try is to deploy this new package to a hosted service which does not contain any
existing deployment.