obsolete units

[Pfeffersack]

Is there a reason to upgrade units with no promotions? It seems like it would be more economical to just recycle those, and build newer units.

Disbanding is the weakest option in Civ4 by far.There is no more hammer-gain for disbanding.
If you can get the necessary money (my tip: try to conduct a trade mission with a merchant), upgrade.Hammer costs for later units increase drastically and the key to a big army is upgrading too, not only new-builds.

Upgrading low or none promoted units is the best you can do, because of the 10exp limit (max number of experience points which can be saved when upgrading):
http://forums.civfanatics.com/showthread.php?t=134288

And finally...don't underestimate the AI...it knows the importance of upgrades.Don't be fooled by the low cash numbers shown in diplomacy.It is just what they are willing to spend in diplomacy.They have a hidden treasury, which they use for upgrading.Especially if you build up your army, if you bring troops to the border or in war generally, they often upgrade a significant part of their army within a few turns.