It can be upcast - it gains an extra 1d8 of damage for every 2 levels (so 2d8+WIS at lvl 4, and 3d8+WIS at lvl 6).
My bad. Upcast is after weapon selection and I don't use this spell very often so it slipped my mind.
Anyway, upcast this spell isn't very beneficial since it's not guaranteed dmg and mobility is bad.
You have much better choices for level 3+ spells.
But it's still useful, since the priest has no other basic level 2 attack spells, and spirit weapon can be used to harass enemy mages and marksmen, or kill severely weakened enemies.