Just off the top of my head, I don't have any real info:
1) Disguise Upgrade: When disguised and set on fire, you ignite, but then get put out. Attentive Spy Checkers will still see you light up, but you won't be running away from a pyro, on flame, crying for Medic, hoping nobody noticed so you can get healed up.
2) Gun Upgrade: A silencer, which allows you to fire it while cloaked. Your cloak will shimmer when it happens, but it allows you to fight back while decloaking/cloaking/running from pyro. It will still drop your costume, if you are not cloaked, however. Reduced damage or accuracy when using the silencer.
3) Cloak Upgrade (if it's an upgrade): Faster cloak/decloak.
4) Sapper Upgrade: Liked the idea from the fake Spy site; Magneto-Sapper, which turns buildings off, requires 4 hits to remove, but does no damage... just shuts buildings off.
5) Knife Upgrade (from TF-Classic): If you successfully backstab somebody, you quickly switch disguises to the backstabbed person. (Costume and Name)
Just off the top of my head; only playtesting could make sure these don't mess up the game mechanics too much.
Remember, nothing is supposed to get UPGRADED. It's supposed to be side-grades, as it were. Something that opens up new options or fixes large problems with the class. You might call the compression blast a pure upgrade, but it's point was to add utility to the pyro class, not just buff it 'cause devs though it was underpowered. So, think it terms of side-grades and fixing problems. If you give a power that fixes a problem, or a straight upgrade for that matter, you probably have to think of something logical to take away to make it balanced.
Decreased cloak and decloak time? Sure, but now your cloak only lasts 6 seconds instead of 10. Re-disguise knife attacks? Alright, but you might have to add 1-2 second cooldown to it, eliminating those ultra-kills spies can get when they sneak up on a group of enemies and start a-stabbin' like mad. The knife would then favor the sneakier, less aggressive spy. Sapper upgrade? From a hardcore engi like me, I can say confidently that won't happen, at least not "4 swings to remove." That would take enough time for a demo just to pop out and add 3 stickies to the mix and blow the sentry, engi, and probably dispenser if it's near, all sky-high. 3 swings might be a possibility, even that is a bit much.
A buddy of mine had an interesting idea: A sapper that doesn't damage anything, but also gives the engineer no notification of when it's placed ("Spy's sappin' mah ______!"). This would encourage spy teamwork like the other no-damage sapper idea ("I'll sap it now and you guys attack it."), but rewards an attentive engineer. It would also make sap-stabs easier, if the engi were busy building something near his sentry, you could sap the sentry and stab the unaware engineer.
For the disguise kit, it's a neat idea, you started to incorporate the trade-off. How about something fun like, once you get lit on fire in disguise X, it gets put out fairly quickly, but a few moments after that (say 5 or 10 seconds) you must switch disguises or be revealed, discarding your burnt up disguise in favor of a new one. Then you can't use that class disguise until respawn or supply cabinet. This idea is a little silly, but hey, so is a sandvich.
So now that I wasted all my time on that, I have to say: I believe scout does need the upgrade more. That squishy little dude is so rarely useful, and in my experience on Dustbowl, Goldrush, and Badwater (my main maps), he's a novelty class. Use him for fun, or for a last-second scout rush. Other than that, he's really not good unless put in the hands of someone who handles him absolutely perfectly...and even then, sentries will rip your face off.