Regarding upgraded memberships... I only tend to consider them if there's recurring advertising involved, ie. monthly or weekly. Usually to make them point ads seem to be the most sustainable way to allow for that, or to make the upgrade last for a limited time instead of lifetime membership.
Most people seem to love or hate points. I love 'em. As long as members could opt out of them, and if the points don't become overwhelming, then I think it's ok.
I like how Hillbilly Hangout and Halloween Mail allow you to redeem points for upgrades with monthly ads. That's actually a major reason while I joined both of them.
And... I enjoy how sites such as Hillbilly Hangout, Laiste's Links, 77 mail and Ozark Belle allow members to use their points in point auctions, for advertising, referrals, cash prizes, etc. Point raffles are fun too

Points are also great because they usually allow for cheap advertising options for paid-to-promote links such as ShareAdSpace.
I love points, really I do

lol
But I'm actually not fond of points that convert to cash because the conversion is usually too low, and even if it isn't too low then I'd still like to know the value of what I'm clicking
while I'm clicking it... not to find out a month later only to be disappointed.
If I could choose how many of my points I could convert to cash, and how many I could save for other redemptions, then that would be ideal for me

- but I'm not sure how that would work out from a webmaster's point of view.