I couldn't seem to find this (is there a FAQ about this item level upgrade anywhere?), but is the item level upgrade with valor points spread across your whole gear or on a per item basis? In other words, can you upgrade every item you have twice or is it limited to only 2 "upgrades" across your whole gear?
You will only want to upgrade items that are either BIS for you (as of the current content) or items of which you know you won't replace them in near future.
Other than that, upgrading all items for a mere 1500 valor should seem a little, um, unrealistic maybe. The intention is clearly to give you a reason to grind valor cap even after you outgeared valor items. Dailies forever, or something...
wonder if the next raid tier's ilvl is based on pre or post-upgrade item level. if it's pre, then non-heroic items in the new tier will be hardly an upgrade.
for example firelands heroic was 391. dragon soul normal 397. so firelands hc upgraded twice is 398, meaning the normal loot would be pretty much useless.
that's most likley how it will end up, I guess. if they base the new tier's ilvl on upgraded ilvl from previous tier, it's a pretty big step for new/rerolled chars that don't have access to months of valor points to upgrade their gear from the previous raiding tier.