Just read your question and have a couple of pieces of advice to offer, but I'm not a commercially successful developer so take my advice with a grain of salt...
If seen a few examples of Google Play reviews where players express anger that a dev has made a new version of a similar app to get away from bad reviews on a previous version. As a result, neither version is successful at getting a high rating or much exposure in the store. There is definitely a threat of alienating existing users, and making them angry could cause them to give future products bad reviews as well making it more and more difficult for you to have a commercial success. You want fans of your games and brand, so in my opinion updating the existing app is the best call.
I also think that the potential for a download spike from a new app is very overrated. I have never experienced a spike of downloads when posting a new app to Google Play. For me, downloads have tended to come slowly and in most cases as a result of hard work marketing and promoting my game, or just paying for advertising. Maybe a download spike will occur if you are a publisher that has a good amount of funding to put into advertising/marketing, but if you're an indie dev with a low or zero dollar marketing budget then I wouldn't count on any initial rush of downloads when you release an app. Getting downloads will probably actually be much more difficult than you expect, even for a free game.
Good luck though, and speaking of marketing please check out my latest mobile game for Android on Google Play, and leave a review if you enjoy it
Thanks! It's called Uncle Scotty's Arcade At The End Of The Universe (AATEOTU).
https://play.google.com/store/apps/details?id=com.AnachronicDesigns.AATEOTU