Another factor is what your future outlook for miles usage is vs your estimated earnings. For example, some people have a rule that they don't ever want to fly long-haul international routes in coach, so they either need to a) upgrade with miles, b) upgrade with SWUs, or c) redeem miles for an award ticket (I'm assuming that purchasing a full-fare ticket is off the table). Depending on how fast you earn miles vs how fast you plan to use them, you may never want to redeem for an award ticket, lest you run out of miles.

Another factor is elite qualification. Will the miles earned for an upgraded coach ticket put you over the threshold into the next elite level after you tally the rest of your year's travel?

If you factor everything in, I think that in most situations, it makes sense to upgrade rather than redeem for an award ticket. And, if you have SWU's, it makes sense to use them rather than hoard. The only exceptions to these rules tend to be in situations where a) elite status doesn't matter, AND b) you earn miles quicker than you can spend them on award travel.