Upgrading a oty first is a must imo, the +2 hp is vital against most false gods. Hourglass is good but the 1less quantum isnt that good for your first upgrade
Something I have been thinking about as well. It is a tough one. Most of the FGs have low HP creatures for the unupgraded Otyugh to devour, so it is not a huge deal. Upgraded Otyugh makes a big difference against Graviton, Dark Matter and Obliterator, but those FGs are pretty close to unbeatable with the standard FG killing decks unless it is at least 25% upgraded (in which case both Hourglass and Otyugh should be upgraded).
Two FG where it could make a big difference is Elidinis in order to devour the Ulitharid and Forest Specter (before they grow to big). And maybe Miracle to devour the Pegasus before it is blessed. The other factor where it would make a big difference is when using the Fallen Druid to mutate big HP creatures into smaller ones for the Otyugh to devour, in most cases the mutated creature will be 3+ HP.
FG with 2 or less HP creatures.
Firefly Queen (Firefly)
Chaos Lord (Ray of Light, Werewolf (before Lycanthrope))
Gemini (Phase Recluse)
Graviton (None, has elite Otyugh/Momentium)
Hermes (Lava Golem)
Divine Glory (Immortal won't matter)
Destiny (Egg of Fate (unhatched))
Incarnate (Retrovirus, Bloodsucker)
Miracle (Firefly)
Morte (Retrovirus, Condor, Ray of Light)
Rainbow (Werewolf (before Lycanthrope))
Scorpio (Physalia, Arctic Octopus)
Seism (Gnome Gemfinder)
Ferox (Ray of Light)
Obliterator (None)
Dark Matter (None)
Elidnis (None)
Paradox (Deja Vu, Ray of Light)
IMO Beating FG is all about getting certain cards early on and having upgraded hourglasses dramatically increases getting those cards before it is too late. Thus I'm still leaning towards hourglass, but not by much.