Sound can be lost after upgrading to a newer version of Mac OS X because of one of the following issues:
1. The Audio Midi Setup application gets set to a setting the application giving sound doesn't understand:
This issue is resolved by this article:
2. The PRAM battery is at least 4 years old. Except for iBooks all Macs have PRAM batteries. Replacing this battery frequently fixes sound issues, that can be triggered by upgrades. When it is under 4 years old, resetting the PRAM helps from this article:
3. Boot Camp settings. It has been found if Windows on Boot Camp has sound disabled, upgrading to 10.7.3 can also disable sound on 10.7. If you are running Boot Camp check this possibility out by changing your Sound settings under the Windows control panel and reboot back into Mac OS X.
4. SMC Reset. Under certain conditions the volume change may be stuck. An SMC Reset can fix it: