In real life, upgrading and refitting usually happens during peace times. Doing so uses logistics that simply aren't available in a war, as they are needed for directing the war. If you go to war with someone, and in the middle, design a ship/plane/tank to counter a threat, do you recall all of your similar troops to upgrade them to this new design? No, you wouldn't even recall one of them, instead you would build the new design and send it to support the troops already in the field. If your troops were "plug and play" as Brad said, imagine the encumberance of the new parts. Now imagine how many supplies like food, and fuel, and parts (for field repairs) would have to be displaced across the field to accomidate these upgrades. How big is a laser cannon? Multiply that times the number of cannons in your fleet. A new engine? That's a good chunk of a ship right there. Don't try to say you'll only need a few parts and the fleet will "McGuyver" it. (as in use the parts to rebuild the whole weapon) That would take training across your empire on how the weapon is supposed to work, and during a war it wouldn't be feasable. Simply put, to send wartime upgrades would cost a fortune, many times more than simply building new ships, as you would have to build a fleet just to transport the parts.
Saying that, I don't think that you should have to send your ships back to the planets either. Limit the range on upgrading your ships. Maybe to 1/4 or 1/3 of their maximum range to allow for the space in supplies the upgrade will need. This will eliminate most of the exploits in refiting an invading army. Give the continuing option to upgrade all ships in range. (i.e. don't make it disappear after you use it once) Anytime there is a ship that could be upgraded in range, alert the player, or give a count of X models that could be upgraded to Y model on the ship logistics screen. Once upgrading has been chosen, the ships in question should either A) be limited to the reduced supply range until refit completes, or

become immobile till refit completes. In this way you would also limit the abuse of refitting as a defensive tactic. You might even include both A and B, like switching to B on the last turn of refit, or only using B when doing engine upgrades. I'm just throwing out ideas that might be a suitable compramise between micromanagement, realism, and gameplay.
Finally, unless whatever is finally settled upon is poorly implemented, I doubt this topic would be a gamebreaker for anyone, or at the very most, few. Also, everything I know about the game I know from the forum. I don't have the money yet to preorder my copy so I can't beta test yet, and I never heard of GC1. So if anything I've suggested won't work with your model, I'm not gonna hold it against you if you don't use it. Just remember, often it is better to find a suitable comprimise than simply picking an extreme and sticking with it. I'm interested in this game myself because I've been wanting a good Space Strategy to play online, and I was disappointed with MOO3, and how the developers there had great ideas, but did not prioritize, so when the game was forced gold, much of the good features weren't there yet, and some of the features included did not work, or didn't work well. I wish the design team luck on this one. I hope that when I get this game, it doesn't end up with the other, on the shelf, collecting dust.