Expensive battleships wont solve the problem. I bet there are more flying now than a few versions ago. The problem is too big to ignore with a "lets put up the prices (again)!" statement. It doesn't work. Period. Battleship prices have risen around one thousand percent over the last three or four version and the problem hasn't got any better.
It doesn't work people. Fact.
Misbehaviour of the factions is as much an issue as misbehaviour of individuals not in factions. They are just that; individuals - because they don't want to be tied down by faction commitments or rules. There is no way an individual could finance the maintenance and purchase of a battleship. A rich bounty hunter or mercenary could possibly have a cruiser, but that is in special cases. general ID's should be restricted to gunboats and below, as a single person cannot hope to finance four hundred (in the case of a battleship) or half that, in the case of a cruiser. A half dozen for a gunboat he would be able to hire though.
If a faction is allowed only one battleship, but there are five mercenaries to be hired, each with a battleship of their own, you can see where that goes. Now, tell me how you solve that.
Addendum: Armour upgrades are fine the way they are. They cost a ton of money, the best costs nearly twice as much as a battleship. They are fine. There is no need to get rid of them. Plus, most unarmoured gunboats die with one dual nova hit. Now tell me thats balanced.