you can sometimes upgrade nowadays but usually only within the week of travel and as I stated even then sometimes not at all.

I was unable to upgrade on a previous trip exept at the airport,(only gold and I think silver can do this) but they wanted to charge more points for that.
I declined and noted that the first class cabin had 14 suites and only 6 were occupied .
You can rarely book a rewrd tkt now at the lower level , once again perhaps only in the week of departure , which is useless if you ahve to make plans however you can often get the seats at the higher level.

To sum up , it is probably worth using the points but firstly logon to skywards and check how many you need for the Peak award and also check in the NEW programme infor that comes into effect 01jan10.
I know that does not shed alot of light but it really is a gamble I guess , perhaps you can call skywards in your city aslo and ask them to check if what you want is available before moving the points.