My son was at the exact same point when he was 6 months old. He would use it at naptime and at bedtime. At bedtime, if it fell out of his month or he woke up in the middle of the night, he would scream until he got the pacifier back. Yes, IMHO, this is a sign that it's time to go in the trash.
My son cried for a couple of nights, and then he was fine. Since your son is older, you might be in for a rough week while your son learns to soothe himself back to sleep, but then it will be over. If you keep up with the pacifier, it could go on indefinitely. :-) Good luck.