Do I need this upgrade? I read all the features and it sounds like it will just make the system larger with no real benefit to my older iPad which has very little RAM anyway. If I don't want it, how do I get rid of those non-stop prompts?

Like most updates, iOS 9.2 is more about stability, security, and reliability than it is about features. However you can get rid of at least some of the notifications by going to Settings > Notifications > App Store and turning off "Allow Notifications"

I have kept our older iPad at iOS 7.x and there don't seem to be any negative consequences. We can still do what we need to do.

There may be an app or two whose latest versions require a later system, but the old versions still work.

Many of the newer apps are iOS 9 only and even more are iOS 8 or later.