As pointed out here, the ability to upgrade your bags to Tier 2 has, most likely accidental, but certainly without a warning, been removed.

Screenshot on how it's supposed to be: http://alex.ticklemy.wang/5hBLFT.png

Aww damn. I certainly didn't mean to do that. I'll get an update out asap to fix that, for now 2.4.2 should work for you (potential crash but nobody has reported it)

It looks like if you load a world with Tier 2 bags, the items occupying that extra space get erased as well. :O

Yeah that looks to have been an issue with some refactoring I did. This should all be fixed in 2.4.2b