Ok.. More information on the lost jewelry problem... and a possible work around for those having the problem.
Here is how I was able to reproduce the problem.
1) Create a ship from scratch and save it. The ship files appear in the "My Games\GalCiv2\Metaverse\ships" directory. (Note that this is a NORMAL, ie Non-Metavers game)
2) Exit the game
3) Move the ship files (The S3_* file and the *.xml file) from "My Games\GalCiv2\Metaverse\ships" to "My Games\GalCiv2\ships" directory.
4) Load the game. The ship you just created will still show up in the list of user ships. Now, if you upgrade it, it does all sorts of weirdness with the parts.
How to work around this problem if you have lots of already defined ships you dont want to lose.
Simple!
1) Move all your ship files from "My Games\GalCiv2\ships" to "My Games\GalCiv2\Metaverse\ships" and they will upgrade properly. (at least this worked for the limited testing I did)