To hell with Armor Upgrades!

[Nightwind]

To do at least a small step towards solving this I say:

Make the armor upgrades use the shield slot. So you have to choose. Use a shield and survive some hits without real damage or be heavily armored but get damage whenever you're hit.

There are shields with different capacities and there are armor upgrades with different strenght.
Et voil?...first step done towards balancing the ships a small bit plus adding more variety...