All this, and more:
Ability to fire MICA is itself a game changer. That means that every one of these mirages can get an almost guaranteed kill in BVR range, with the enemy fighters not even knowing what hit them. A missile with passive sensors with LOAL - that means that it won't register on the enemy's MWRs, and the enemy will not take any evasive action in time.
That's just one aspect. The upgrade is quite comprehensive - the mission computer and navigation equipments will be the same a those on the Rafale. Every bit of the electronics is being changed. Other than the airframe, everything will be 4.5++ gen.
Now is all that worth the price? Maybe it is too expensive - but french stuff is expensive, and this is a platform that we have a lot of experience on. On paper it may look better to get a new aircraft, but in reality that is not so. Consider the wealth of tactics, doctrines and infrastructure the IAF has built up over the years for these birds. (BTW, if you consider the infrastructure and logistics and spares and maintainence depots for a new platform, this upgrade price will pale in comparison.) The cost of ownership of a new aircraft is not simply the flyaway cost of the new birds. It includes all the costs mentioned above, plus the man hours spent in training flying and ground crews, developing new tactics and so on. It is far easier and cost effective to upgrade the platform they have so much experience on, and have come to love.
BTW you are factually wrong in claiming that they have ony 12 years life left. They will have a service life of 20-25 years after the upgrades:
CCS to consider $ 3bn deal with France to upgrade Mirage 2000 - The Hindu
The IAF are not idiots, if it was cheaper to get new platforms, they would do so - after all, who wouldn't like to fly spanking new jets? They know much better than us, that getting a new platform would mean giving up all the costs that have been sunk into the mirage platform so far, for setting up infra and training, and also spending all that on the new platform.
Yes, french stuff is expensive - but we get cutting edge stuff for that, and it is cheaper than getting a new platform. Looking at flyaway costs of new platforms does not give the complete picture.