“Hidden throughout Dinosaur Planet are numerous Magic Caves: the Staff will rumble and glow to let you know when one is nearby. Find a way in, and you can collect an upgrade, adding a new icon to the Staff section of the C Stick Inventory. Highlight the icon and press the A Button to use it [or just assign it to the Y Button]. There are many different Staff Powers to find an collect, but using them reduces the Staff Energy meter. You can refill this meter by collecting gems from the Magic Plants scattered throughout Dinosaur Planet.”
—Star Fox Adventures; Instruction Booklet
A Staff Upgrade is the gaining of a new ability of Krystal's Staff. The only way to gain those upgrades are around the Dinosaur Planet inside magic caves. The magic caves either contain a new staff ability or an energy meter upgrade.
In total there are 7 staff ability upgrades as well as 3 energy meter upgrades. The ability upgrades are essential to play the game, but the energy meter upgrades are not, but some staff ability upgrades may not work on smaller energy meters, particularly the original one.
ThornTail Hollow - on top of the ThornTail Store is an area Fox can reach using a Rocket Boost Pad. Up here, using a Bomb Spore to blow open the cave and shooting all the Fire Blaster pads inside will unlock the cave.
Cape Claw - use the cannon (accessed via a Staff Portal Door) to blow open a rock on the beach of the cape. The rock is quite tall and is situated quite near to the High Top.