I could imagine upgrading to the M3 or even M4 MBA, but at that point it will have been 4–5 years on the M1.
This isn't to defend Apple's stingy memory and storage specs, I just don't end up needing more than that really for the kind of work I do.
The base SSD was 500GB too. Which I'm using like... half of? It's the same thing with iPhones. The base storage amount for Pro models is 128GB and I never run up against that limit. Maybe if I took way more pictures and videos.
I store all my important data in different versions of the cloud (code I write in remote Github repos, files in Google Drive) so on device stuff is more ephemeral.
If I was a professional photographer or video editor, I'd care a lot more. Again, I think they should offer more a base but I don't ever run into actually needing it so it's not a pain point for me.
How much memory do you have? Seemed like my biggest concern when it came to this generation of MacBooks and longevity.