They did get an upgrade with Diplomacy. Maybe 1.5 might have made them worse.

I personally think the pirates should only come with their modified cargo ships that steal trade income for the first few levels. I mean, they are pirates there to, well, pirate. Maybe at higher levels add in some pirate Cobalts, and maybe at level 4 raids have Gardas then save a couple of Kodiaks and Krosovs for the largest attacks.

I really think it's a bit ridiculous how the pirates have the best fleet into the midgame and how whoever gets that first raid on them is crippled (AI especially) or at the very least they're smart enough to defend their planet nearest the Pirate Base (at the time the raid launches). Although even defending the planet means your fleet isn't expanding early game (this is an even bigger problem on larger maps because the pirates are generally further away so take even longer to reach your planet).

An increase in the duration between raids may also help. But alas, I guess that's just about all of us deactivate the Pirates.

Pirate fleet sizes are based on how big your empire is, the initial first expansions in pirate fleet size happen rapidly but slow down towards the later expansions, focusing more on upgrades. The way I deal with pirates is to rush out 2 caps and their attendant ships, 1 trade port at the nearest planet to the pirate base and just sit there with 1 cap and defenses, while the 2nd cap and its ships focus on expansion. You can change around with this but the general guide is trade and refinery ships make pirates lose their minds. they just charge the little buggers and ignore everything else except for a handful of ships, making it free exp for me.