Create alphabetical pager I want to list all the posts with alphabetical headings like this site:



How can I do this with drupal 7 using views?
Have you looked at the "Glossary" view?  It is a sample view included with the views module that lists all site content by letter in a manner similar to the link you listed.

The "Glossary" view is disabled by default, but you can enable it on the views admin page (admin/structure/views).

The settings for sorting the posts in the "Glossary" view can be found on the views edit screen under Advanced-> Contextual Filters-> Content: Title.  If you click Content: Title, under "More" you will find the option to use upper or lower case when sorting the view.