One thing that confused the hell out of me with Civ2, and still does in Civ3, is how to get your palace upgraded. The last game I played, I got a whole two improvements, from begining to end (1930). The game I'm on now, I'm in the 1600s and I've got a mamoth of a structure (which, of course, I want to make even larger). So, is there any thing which can be done specifically to get an upgrade, or is it just utterly random?

it's not randomly caused

I think it has to do with the happiness of your people. It is common in my games that when some cities enter in WLTKD period the people offer to enhance my palace as well.

Ie raise the luxury rate, eh? I didn't know if there might be other factors, such as cultural milestones, having X number of wonders, X number of citizens, etc...