Why do you want to give them an upgrade? The problem with Volks is whatever upgrade you give them, they going to blob as hell with. Instead of a shreck blob you'll have a XX upgrade blob.
They are the cheapest and most effective squad of the game, this is funny because Relic has probably nerf to hell conscripts for that reason, they were cheap and spamable and now they do the same with volks.
I don't see any Conscript blobs even when PPSh's are selected, nor do I see Osttruppen blobs very often (usually it's because an officer is leading a charge, but they thin out fast and/or disperse afterward), I've seen a couple RE blobs but not in person and they don't seem to work so great. So why do you think Volksblobs will persist? The primary reason Volksblobbing works is because they get excellent AT Weapons and Obersoldaten to add in godly AI.
Volk are:
Cheap to build
Cheap to reinforce
Best vet in the game
Can carry shreck
Volks are only 5 MP less than Grenadiers or Conscripts (240) and 23.5MP to reinforce, which is only 3.5 more than Conscripts (20) and 6.5 less than Grenadiers (30). However I will agree the ~50% dodge chance at Vet 5 is ludicrous and should be reworked. Panzerschrecks of course, should be removed from Volksgrenadiers as we are discussing. Then we can give them toned-down automatic weapons so they can stay relevant into the mid-to-late game.