Upgrading has to be done before the last day. That's a policy.
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Just because a flight is cancelled and you are now going out on the next day doesn't mean you have to use that extra time at Disney. Flights get cancelled all the time, weather related, maintenance related, not enough passengers (so a condensing of flight is done), etc. Disney cannot nor should they be responsible for accounting for all the "what ifs" that can happen.
The OP didn't have to go to Disney with the remaining time they had but they chose to. I can understand if they wanted to for sure but if they did then they would need to purchase a ticket. There are also things to do on Resort property that is not going into the theme parks.
It's good though that the OP was able to remain on property and that a resort room was available to them.