Oh you're referring specifically to the Dreamhold, gotcha, thought you were talking about the general base needs be upgraded, which means you would have upgrades.
Yeah that's fair, getting some tier 3 dreamholds for pixies might be enough that sylphs aren't the most useless.
Though I've never experienced that scenario where I couldn't get more tier 3 dreamholds or Rainbows.
Rainbows where you build leprechauns would be a way to avoid getting up to tier 3 dreamholds, but they do cost more.
So maybe there's some gap where you can use them a bit and they're not objectively inferior, still not sure what would be worse.