Upgraded traps work the same way as the non-upgraded (meaning that they do not get faster or sharper) but deal much more damage. That way, they are more effective in defending your gem. The less health an intruder has, the lesser their chances of stealing from you.

Please note, that when a trap is being upgraded, it does not function and your chest is more vulnerable. To upgrade a trap, simply tap on it. Trap upgrades require gold.
You can identify the level of a trap by its look: