Marketed properly, I think a more upscale approach to flying would be a great move for one or two of the legacies to approach - hell, they could get into an upscale war... who's upscaleness is better than the other (as opposed to who's prices are "lower").
Here's why: an awful lot of people are sick and tired of the airport hassle, security lines (with free groping!), and crappy old terminals with no where to charge your laptop/mobile device without sitting in some filthy corner on the floor where the carpet hasn't been cleaned in 20 years, next to a 30 people trying to do the same thing (alright... who didn't shower??), only to spend time a few hours in an aluminum can with crammed overhead storage, crappy coffee, food that would insult a homeless person, windows you can't see out of because either a.) they are absolutely filthy with the last month's worth of head grease (

), or b.) they are scratched to hell, seat pitch suitable only for pygmies, and the guy in front of you who slams his seat back the very second he can with no warning at all, spilling that crappy hot coffee all over your lap.
There are people out there willing to pay a bit more for at the very least the perception of increased value, and preferably a legitimately more upscale experience. There are people out there buying iPhone 5s, Galazy S3s, 72" Panasonic VT50 3D televisions, BMWs, Audis, Lexus, Stickley furniture, organic food, GAP for Babies, Patron, Louis Vuitton, Breitling, etc etc etc, when they could be buying Pantech Breeze IIIs, LG A340s, 32" Sceptre TVs, Chevrolets, Hyundias, Toyotas, IKEA, Chef Boyardee, hand me down kids clothes, Jose Cuervo, Wal*Mart brand, Casio, etc etc etc.
These folks are not a niche market. I'm in that market, and I know there are an awful lot of us out there (middle to upper middle class, or value-seeking upper class). I don't want to pay several times as much for a better experience, but I will gladly pay a reasonable amount more. Using our trip to France as an example, one round trip ticket was about $1,200. The next step up was over $8,000. One step. There is no level between the unwashed masses in coach and the pampered bourgeoisie in business/first. (And no... I don't count paying $80 extra PER FLIGHT for an aisle seat closer to the front a step up...)
Given that there would be very little ROI on splitting aircraft into yet another class, I just want an airline that aspires to be better, period, coach included. They'll need to charge a little more for that. Some people will refuse to pay that higher price, based on their Priceline searches. That's fine. Let them fly in the cattle cars.
You have to market honestly. I would LOVE it... LOVE IT, if a legacy like Delta or AA decided to run with this, change their business model, and put out advertisements that basically say:
"You know what? We know you are tired of (see my paragraph above, crammed seats, bad food, etc.). We know you are tired of extra baggage fees. We know you are tired of... well... flying. And we are sorry for being a part of that. Today is a new day, though. <Insert promises of a better experience, etc.> And you know what? That is going to makes us just a little more expensive than the other guy. But we're pretty sure you'll be okay with that. <Split screen, showing a person squished in their seat on one side, and a person far more comfortable, looking quite relaxed, and enjoying a nice light meal with fresh food on the other.>"
I'm sold, and I'm flying that airline.