This game has potential, but has fundamental flaws in its upgrade and medal-earning systems.
The former is uninteresting because it is easy to acquire the best (i.e most expensive) upgrades after a few levels. This problem could be solved if enemies dropped less money and/or each upgrade had different strengths and weaknesses. The missile upgrades do this well; one has two powerful missiles while the other carries eight less potent shots. You also attempt (with less success) to show variety with the body upgrades, although it is unclear if hit points are more important than armor rating. Finally, if you do add upgrades with different pros and cons, make sure that the player can re-select an upgrade after they already bought something else.
Once that issue is addressed, make the combat more fun. Currently, there is little skill or strategy involved involved in the dogfights, which made me frustrated during levels 13 and 14 (which were unreasonably difficult) and prevented me from getting a gold star in those stages. Add more depth to the battles by implementing weapons that fire in different directions, evasive maneuvering or scrambling enemies' radar. Get creative; each player has an unused hand to be utilized.
This controls are tight and the art is fine, just work on the aforementioned problems and you could have an excellent sequel on your hands.