I am trying to add image to blogs in silvertstripe 3.1 with the help of the following code:

<?php 
class BlogEntryDecorator extends DataExtension {

   static $has_one = array( 
      'BlogImage' => 'Image' 
   );

   public function updateCMSFields(FieldList $fields) { 
      parent::updateCMSFields($fields); 
      $fields->addFieldToTab("Root.Main", $BlogImage = new UploadField('BlogImage'), 'Content'); 
      $BlogImage->getValidator()->setAllowedExtensions(File::$app_categories['image']); 
   }

} 
?>

<?php 
#------------------------------------------------------------- 
# Edit file: mysite/code/_config.php 
#------------------------------------------------------------- 
Object::add_extension('BlogEntry', 'BlogEntryDecorator'); 
?>

When I try to build database again, I get an error.

On further research I realized Object::add_extension is deprecated and I have to use something like the following

BlogEntry:
  extensions:
    - BlogEntryDecorator

I am not sure about the above code & which file should I put the same in.
Kindly suggest

You need to put the new code into a file called config.yml.

If you have the existing code in your mysite folder, this should be located in a folder in mysite called _config

Another way you could do this would be to create a mini-module.

File structure would be:

your-site-root {top level folder}

BlogEntryDecorator {second level folder}

_config.php {third level file}

_config {third level folder}
config.yml {forth level file}

code {third level folder}
BlogEntryDecorator.php  {forth level file}

The advantage of using the second method is that you can then copy that folder easily into another site.