I agreed with Reply #2, with the caviate that sometimes you should upgrade instead of increase fleet supply.
Wow, I have to say, I haven't really thought about the balance btw fleet supply and fleet up grades, lol. Since in the early games you only have to deal with only one front maybe it is a good idea to up grade your ships than inceasing your ship supply.
But then again, you will have a hard time to make up a balanced fleet, till later. With the new carriers, you can't afford to spam Lrfs anymore. So...no, you should always up grade your ship supplies asap, whenever it was needed.
Ok, this is what I am thinking right now: in the early phase of the game, all the decisions are equally important, even one extra scout ship you make could mean life or death. After the initial purchases with your starting resource, your economy could only allow you to make one decision every 20+ seconds, which cost averagly around 300 to 600 credits, So if you upgrade your weapons or armors instead of making more ships at the beginning, you are pretty much taking a sucker's bet...even when armor upgrades benefits absolutely EVERYTHING of your empire.
Here is why, according to me at least: the upgrade could take a while to be completed, during this time, you could not make any ships, that in turn decrease your small fleet's survival rate and fire power. You will have to wait a while to up grade your first asteroid, which in turn cost you more resource and production rate. In medium or large maps, early up grades also means, that you will have to wait longer to be able to split your force into multiple fleets, and that could lead to slower expansion rate for your empire. Finally, since the upgrades would need some time to kick in, so during such periods, you won't enjoy any benefits with all the risks you are taking, yet the resource were spent, anyway. All in all, I personally think only newbies should try up grades their fleet's armor or weapons whenever they could afford them, since beginners wouldn't know how to spent their resources, anyway. That's the truth.