The choice is yours, miles, upgrades, or any of the other options that may or may not include flying. As others above have said, upgrades are of more value to most people here, which is why they are discussed more here then free flights.

For example, My Wife and I have hundreds of thousands of miles, but we too usually use them for upgrades. Most of the time we are flying for very little money if it's personal (where it's better to receive then give), and we certainly wouldn't use our miles for free travel for business (nor are we required to, any miles we get are ours to use as we see fit), so more often then not we will use them to upgrade.

But we don't have to. If we wanted to take a free flight we can do that too, just call and let them know when you want to go and they will take care of the rest.

One thing you need to know, Hawaii fills up the award seats very early, so as soon as you are sure of the dates, if it's less then 330 days away (one year minus one week) start calling to get the seats, they may be gone if you wait at all. Once you book, they will deduct the miles from your "bank" of miles. By the way, you will not earn miles for award flights either.