The significance of LUP! (2008)
The Leica M3 represented and represents the final stage of rangefinder evolution. The key characteristics are: lenses with manual focusing and a coupled rangefinder with static magnification and selectable frame lines. This basic DNA of the Leica CRF has been preserved over half a century and in all models: from M2 to M7 and MP. Even the M8 shares these core characteristics. A minor deviation like the M5 is still a true Leica CRF in the lineage.
It seems that this type of camera cannot be evolved any further without shedding its root values. Indeed, the only alternative has been the Contax G series, where we find autofocus and a finer with continuous variable magnification. This approach has not been a resounding success to say the least. Leica engineers are of course continuously thinking about improvements, but a radical departure from the basic DNA is too costly to implement or cannot be done within the stern quality and engineering requirements of Leica. The market failure of the G-series may be indicative of Leica’s hesitation to change the winning team. And of course there is the large user base that cannot be alienated by a new model that is not downwards compatible.
So the Leica options to improve the CRF camera are quite small. Of course one can add some much needed improvements, like a mechanism to change the exposure compensation directly and not by cumbersome menu selections. But such an improvement would not count as a new model. 
Leica’s basic challenge is in fact the combination of the existing user base that is quite traditionally oriented and the price tag of the M8. The M8 might be a good seller (in the context of the Leica world), but it has failed to capture a large and new audience. And a rapidly expanding user base is required to introduce a new camera that sells so well that the high cost of design and tooling and production can be recouped in a relatively short period. The concept of the manually operating CRF will always be a niche product, especially since the DSLR products evolve very fast and prices continue to drop. 
Consider the options: a new M9 with minor improvements with a price tag of the current M8 will not convince many buyers who look for a feature-laden DSLR at a third of that price to buy into the Leica system. And how many M8 buyers and owners will buy a new M9 at the same price with some improvements. Buying an M8 for Euro 5000 and then buying an M9 for again Euro 5000 with small improvements does not make sense. To put is in simple words: the added value of an M9 as long as you stay within the current M8 concept is quite low and the return of investment quite low. Thus introducing a new camera is a major risk for Leica and would not expand the current user base significantly to warrant the investment. 
Assume that Leica can design and manufacture an M9 with a 35mm format sensor. Given current price levels, such a camera would be positioned  in a price range above Euro 7000. The question then is again identical: how many new users would pay that amount of money for a camera with quite limited features compared to the dazzling array of functions in DSLR’s at half that price. And how many Leica M8 users would cross over to a new model, throwing away a large investment in the M8. Mike Johnston may claim that Leica users have fat wallets, buy the rational buyer is still active, even within the Leica community.
The Leica Upgrade Program (LUP) is a smart move to circumvent all problems indicated above. The LUP signifies that Leica does not have the inclination to develop a fully new manually operating CRF, given the risks indicated above. The LUP is a strategy to capitalize on the current user base and introduce improvements in the CRF concept that can be smoothly integrated into the current camera model at a reasonable cost for the installed user base. An M8 owner may be unwilling to pay Euro 5000 for a new model with a slightly less noisier shutter, but an upgrade for Euro 1200 might just be acceptable: the ROI  can be emotionally  digested. 
Leica can be sure with a LUP that the current installed base will not defect the Leica world and continue to invest in the upgrades. A new M10 with 35mm sized sensor for Euro 7000 might be too steep a price tag for me, but upgrading my M8 for Euro 3000 might be just acceptable. 
Personally I find that the price tag of Euro 1200  for a new piece of glass and the exchange of a few springs and cogs in the current shutter mechanism is on the high side. But we all know we are in Leica territory.
As a conclusion I may add that the LUP points to a few tentative inferences;
The specs and price tag of the digital M8 has not convinced enough new buyers to expand the Leica user base significantly
The size of the market for a manually operating digital  CRF is quite small and cannot support the introduction of a totally new RF concept 
The evolution of the manually operating CRF is at its natural end, technologically and commercially. 
Leica needs to make a profit on current products and cannot afford to introduce products with a high risk of failure or ask for too high an investment to recoup in a reasonable period of time. The LUP approach fits neatly into these requirements. 
It is also a statement that the evolution of the M will be incremental at best and that the M8 will be for the foreseeable future the last M camera in the M evolutionary chain.
We should reflect on the fact that a change of sensor size and number of pixels is nothing more than a change form Tri-X to TechPan in the film loading period of the M-camera.  
Postscript
The LUP program was quietly buried by Leica and the M9 problems that have recently been emerged show that it is nowadays impossible to upgrade a digital camera that has been made with current production techniques. This is indeed strange. Most computers and consumer electronic products are made with obsolescence in mind. The production technology may be based on the integration of modules, but this is done to cheapen production, not to introduce easy exchange of parts. The first company (Leica)) that would do this deserves a medal!