As someone who was in Memphis for the AAC tourney this year, this surprises me not at all. The AAC had an option to bring it back to Memphis, but the attendance was so miserable that I can't imagine they'd seriously consider it. Outside of the Memphis game, which itself was not nearly sold out (scarcely occupied above the lower top deck), the attendance was abysmal. I had seats in the upper terrace and I only sat there during the Memphis game, because they closed the entire upper level for all the other games due to poor ticket sales. Some of the games had maybe 500 people there, it was an embarrassment.
Even outside of UConn games, it would be difficult to pull as poorly as the tourney did when it was in Memphis, so this decision makes sense. It's really a shame for the conference, because Memphis has a beautiful arena, it's a nice location given Beale St. right next door, it's a reasonably drive for most of the conference members etc., even if UConn is never going to draw well there.
In Hartford the situation will be the opposite.... I hope these upgrades do something to spruce up the arena, because it's going to be tough to compare to the beautiful FedEx Forum, and if they're not significant we're not going to want to showcase that embarrassment of a venue to the world in prime time.
