Well you asked what I'd do....
I would invest 50% of the money in upgrading the diamond and 50% in an interest bearing account for a future splurge for myself and/or my family.
I know, I am way to practical! LOL
You and I think alike. I was going to tell her to just invest the money...LOL. I am practical as well and I actually love that I am this way. I would upgrade the diamond certainly and then save/invest the rest of the money. Perhaps you can buy yourself an accessory as a treat in addition to the diamond upgrade but save the rest.
Don't look for things to buy...this is often what people do when they come into a bit of money. They blow it and just look for things to buy--things they will later regret purchasing. If you don't really want any bag..don't buy one at all.