I don't really see what the LH crew did wrong. They offered to help...that's about all they can do. Too many people try to upgrade for various "reasons". I'm not discounting how you felt, but you never know with people. Additionally, like others said, it may have been an issue with them not even being able to process an upgrade in flight.
I actually think they were very generous to allow you to continue laying down. I can't imagine how a United crew would have reacted for example.