We definitely need an option to chose which unit type to upgrade to. It could be restricted to the same kind of unit (ie melee infantry, or even axe wielding infantry), but that would at least allow us to chose the exact weapon we want (because the one selected by auto upgrade is not always the one we'd prefer to use when we can chose between a magical and a mundane one for instance), and the accessory slots:
If there is a "best" option to upgrade an unit equipemnt to, unit design is compltely pointless and a waste of time and effort, and if there is no "best" option, but various trade offs, we'd better be allowed to chose how exactly we want to upgrade each unit.