The warehouse and main market can be upgraded twice with no increase in service area or storage capacity, yet the upgrades have progressively higher maintenance costs. So why upgrade? I haven't had major battles yet as I'm just learning the ropes so I'm only guessing that the upgrades are significantly harder to destroy? Is there anything else?

The advantage of an upgraded warehouse is, that each level gives it an extra cart for picking up goods from factories. And by the way the storage capacity of your island does get slightly higher by ugrading warehouses.