How to read file submitted through file field in block configure form
You want to use the #type 'managed_file' instead of just file: http://api.drupal.org/api/drupal/developer--topics--forms_api_reference.html/7#managed_file.

That will then automatically save the file and create a row in {file_managed}, You just need to set it as permament, as explained in the link above and then save the fid, for example with variable_set().

You can also set the #default_value for the fid, and it will display the field again.