At the moment, I'm getting staffs with stats like 100 normal damage and 50 elemental damage. When upgrading, I normally get a choice between adding on 9-10 elemental damage or 10-12 normal damage. Is there any reason to ever go for elemental damage in this situation? Does it have a higher multiplier later on? Or is it just for weapons which start out with higher elemental damage?
Elemental and Normal damage all scale up based upon the values they are currently at which is why you see the variance. If you have a higher base damage than elemental damage then you will see the base damage initially getting more bang for your buck so to speak.
However.. Elemental Damage is not capped at the same point-per-upgrade level that Normal damage is. This makes elemental damage able to scale up to larger amounts faster. This is ofcourse tempered completely by the fact that there are going to be quite a few creatures that your elemental damage will have no affect upon.
A nice tool to help you see what affects you will have upon leveling an item can be found here. The tool does appear to see regular updates.
NOTE: (yx.'s comment since I feel the information is worthy of having more notice brought to it)