AS a general rule, the upgrades to ships are usually not as useful as simply getting more ships, and usually only should be seriously looked at when upgrading your fleet capacity gets too costly (aside from the first levels of hull and shields, which cost no metal at all and are quite cheap, they can sometimes feel worth it, at least to me). You'll likely find
this and interesting read, though, since homefleet mentioned it.

But anyway, armor matters the most, to me, when you're heavily using Repair Platforms or ships that repair the hulls of other ships. Since repair abilities repair straight up hull points, regardless of armor, ships with higher armor gain more from these abilities, since their hitpoits simply count for more. So paying points to armor under these circumstances, at least to me, makes sense.

TEC also, being very heavy on armor and hull but not so much in shields have a good amount to gain from armor. The strikecraft as well of all the factions have no shields, so getting some armor can help somewhat, although due to their overall frailty, having one or two more armor points usually won't help a unit that starts with just 70hp to begin with.

But usually, more ships outperform better ships for the cost, so that should be kept in mind.

Does armor really also increase the hull repair rate by 5%? Didn't know it had any effect on the repair rate.

there's a difference between hull and armor.

hull --> overall HP and HP regen

Armor --> Reduction in damage taken

generally, i perfer shield upgrades.

Armor gives your ship an EFFECTIVE regeneration rate increase.

Here's an example (not real numbers).

Carrier without any armor takes 100 damage of its 800 points. It regenerates one point for second, so it takes 100 seconds to completely heal.

Carrier now has armor upgrade. The same salvo that did 100 points of damage now only does 95 points of damage. So now it only take 95 seconds to completely heal.

-- Retro

I think this is far more true of weapons upgrades than of armor, although it's true for both. The trick is waiting until you have a big enough fleet that a weapons upgrade increases your fleet's DPS more than buying ships with that money. Armor upgrades are more useful because a weapon upgrade will only help certain ships, whereas armor upgrades help everything.

In my opinion, armor is great, i usually get it right after my first small fleet (the pirate-killing one that goes in front of your colony ships). If you think about it, armor increases the survivability of all your ships , so the sooner you get it the more you save in the long run. I think just getting more ships instead is really short-sighted.

I like armor as TEC, because of the basic damage reduction ( as noted by devessi above ).

It works out very well when you're facing numerous small ships. Each doing 10 points of damage. a 5 point per hit reduction is pretty damn good. Evan 2 or 3 points helps a lot. I go for the armor/health/hull/shield upgrades before weapons, since they tend to grant all my ships a bonus.

Should you get the upgrades at the expense of your fleet ? If it means I get 25 cobalts versus 30, then yes. If it means I get 5 cobalts instead of 10, then no.

Something else to keep in mind is that shield's repair quicker then hull - hence doing something to minimise how quickly the hull is destroyed = a ship that is back to 100% health quicker!!!