I have no problem with the way Ultimate Electro was done. The problem with USM's rogues gallery is every other villain is either lame or a one time throw away. You need variety, it doesn't always matter who get made into a compelling villain, but how many do
Still shouldn't updating often involve in making them more compelling or have deeper motives or better established personality, not less so.
However I agree with you, there is nothing wrong a one or two thug villains, with only two dimensions (STAS did a good job of expanding the characters of most of the Superman villains, but Parasite remained just a thug, ditto with BTAS, with Croc remaining just a thug), but outside of the big Four (Venom, kingpin, Doc Ock and Gobby) none of the USM villains are even remotely interesting (plus Venom is the only character who is an improvement from his 616 counterpart) Vulture, Scorpion, Electro, Kraven, Sandman, etc are all vastly inferior to their 616 counterparts, how is that an good update of these characters.
The only B-list villain who got any character development was Shocker and by then he was such a loser that I that didn't care about his cliched pissed off employee back story. Don't give the joke characters development, just use them in funnier ways. I don't care about Stilt-Man or Killer moth development as characters, I just want to see them used in funny ways. 626 Shocker is still more interesting, Ultimate Shocker has worn out his welcome as a joke character.
The reason I suggested ultimate Electro for development is he is the only non joke B-list character that hasn't fallen off the wayside, when's the last time we have even seen Ultimate Vulture, Rhino or Sandman? though perhaps there is potential with Ultimate Beetle.