Am I the only one who thinks that "upgraded" versions of consoles are pretty much never worth it? The extra power will only be used by a handful of games and it is not really a huge reason to upgrade. Exclusives will be extremely few games, if any. The Game Boy Color is a huge outlier here, born out of a lot of particular circumstances that are not applicable 20 years later.
If I was in charge of Nintendo I wouldn't really release any upgrades and just concentrate on making sure the "Switch 2" or whatever is a success; giving gamers what they want and what not. Granted it will be hard for the next generation of Nintendo to be as successful as this one but no reason not to try.
If they do have to release an upgraded version I'd just keep it simple, call it the "Switch plus" or whatever. Give it a 1080p display and the possibility in theory to run games in 4k (in practice the Switch probably lacks the power to run games at that resolution). Give it a small power boost (to at least run games at 1080p and beyond, even if full 4k is impossible) and keep the upgraded battery/processor from the "red box" Switch.
Price it at the same price as the old standard Switch (which gets discontinued).
Release a similar upgrade to the "lite" model in 2022 as well. Larger screen, with a 1080p screen and maybe an even longer battery life if that is possible, with no price hikes or drops.