Bluecube,the weapon upgrade for suikoden is like this:

You have your base weapon when you start.Then for a certain amount of gold you can upgrade the attack on your weapon by buying an upgrade with gold.Then the blacksmith upgrades you weapon with new attack rating.

Note:The name of the weapon always changes when you upgrade.
Also in suikoden only the attack rating on your weapon goes up.You learn skills by having certain runes.