Here is a thought. For the person who wants new carpet offer a new lease that would cover the cost of the carpet and then some. Avalanche stopped as then you can offer them all the same deal, which is very important.
I think some updates are probably in order. The best senario is to update the ones the become vacant so you can then put it back on the market at true value. However if you offer to update while they are in there so they can enjoy the new stuff it makes sense they need to pay more.