Let me give you a slightly more helpful response.

DDR 1st Mixes can, and have been upgraded to 3rd mix or higher. However, the digital I/O board for the upgrade is quite expensive. Keep in mind that the digital I/O board is not the only thing you will need. You will also need a Konami Flash card. The flash card is a generic Fujitsu Linear Flash Card. My friends and I are experimenting with putting in other generic flash cards in DDR machines to see if they will register. I believe a Module of some sort is also required, but I do not have that info at this time.
The person that owns Funland Game Room, a name well known for DDR parts quoted to me the price for the digital i/o board at 1000 dollars. This is a lot more reasonable than the 2295 quote I recieved from channel beat. Be aware that that probably does not include the price for the flash card. His email is JU707@aol.com
It might be easiest to go a different route for buying your needed supplies. A DDR 4th solo mix should do the trick. If you were to buy that entire machine, you would be able to take out the necissary parts to convert your 2 player machine since the parts in the solo 4th are identical to the 2 player in many ways. (I should know, I own one). You would also have back up replacement parts such as more arrows, and the sensors that are underneath the pads as well as many other things.
With some research and work, I'm sure you can be on your way to happily playing a higher mix.
If not though, I would be happy to buy your 1st mix off your hands and I'll upgrade it myself ^_~