An term of derision. In this situation, a woman regularly hooks up with a man who is only interested in casual sex. The man will either explicitly say that he does not want a romantic relationship, or will repeatedly tell the woman that he is “not sure what he wants”- as a way to defer the subject, or to indirectly tell the woman “no.” But the woman naively believes that if she just sticks it out long enough and shows the man how much she cares for him, a proper relationship will eventually begin. In actuality this will never, ever happen. The “hook upgrade” is the female equivalent of the “gay friend” phenomenon.
Despite several failures, Buffy continues to believe in the possibility of the hook upgrade.