if you think you'll stay in the league, definitely expand your arena. And even if you don't think you'll stay there, a bigger arena has no cost except for the expansion itself, so if you expect to promote again, it's still worth it by then.
and you will see some bumps if you're doing too badly, but generally speaking your fans are happy you are where you are now, so you'll never have really bad attendance in any games.
Also, remember that the attendance level in higher leagues is generally speaking higher.