improved units are better, and their stats are higher. If you choose to upgrade, you have 5 options, but in my opinion, transforming one unit into another (upgrading to a different unit) doesn't seem realistic. It's like silver unicorns grazing and then suddenly turning crimson, and then back to silver – it doesn't feel realistic.
Bow down and hear our cry,
Our earthly rulers falter,
Our people drift and die,
The walls of gold entomb us,
The swords of scorn divide,
Take not thy thunder from us,
Take away our pride.
G.K. Chesterton: English Hymnal