Ok. I've figured it out.
I know exactly what it is about your prepared system that's throwing me. First, if we don't give prepared casters any amount of spontaneous casting, then we don't really need to give the spontaneous casters anything else. Sorcs can stay as they are. They could just simply arrange their own spell points into any spell combination they wish on the fly, instead of having to plan it out before hand. Also, they'd retain the "33% more spell (points)" rule, along with all other limitations normally given, etc. etc.
Second, if that were the case, we have the basics for a very nice and extremely similar mana point system that's just as good but slightly more versatile than the current slotted one (and thusly, slightly more powerful). However, what makes it more versatile? Well, you can already "downshift" spell slots, where you trade a higher spell for a lower one. All you're really gaining is the ability to "upshift" as well. (And you're "conserving total power" by allowing the "downshifted" spell to have a remainder; i.e. your 3rd level spell turned into a 1st and a 2nd, instead of just a 2nd).
So... why change the system at all? Why not just add a perk of some sort that equates to this ability? For example:
Feat: Upshift Spell [metamagic]
Req: Ability to cast 3rd level spells
Benefit: When preparing spells (or choosing to cast a spell spontaneously), you may sacrifice a [spell level -1] slot and a [spell level -2] slot to gain a [spell level] slot. (For example, sack a 3rd and 2nd to gain a 4th.) You may not use this ability to gain a slot higher than the highest level spell slot you have available. Zero level spells cannot be sacrificed, and you cannot gain any spells lower than 3rd level this way. You may do this as many times as you have spell slots, including using any newly created slots to make higher level spells. (For example, sack a 2nd and a 1st to gain a 3rd, and then sack another 2nd plus that 3rd to gain a 4th.)
Viola.
Or, if that is too strong for a feat, how about this:
Feat: Downshift Spell [metamagic]
Req: Ability to cast 2nd level spells
Benefit: When preparing spells (or choosing to cast a spell spontaneously), you may choose to sacrifice a spell slot to gain a spell slot 1 level lower and an additional spell slot 2 levels lower (to a minimum of a zero level spell). (For example, sack a 3rd to gain a 2nd and a 1st.) You may not sacrifice any spell lower than 2nd level in this way. You may do this as many times as you have spell slots, including using any newly created slots to make more lower level spells. (For example, sack a 5th to get a 4th and a 3rd, and then sack that 4th to gain another 3rd and a 2nd.)
Normal: You may sacrifice a spell slot to gain one spell slot any spell level below that one.
Feat: Upshift Spell [metamagic]
Req: Downshift Spell; ability to cast 3rd level spells
Benefit: As above
OR, you could just allow spellcasters to upshift in a more generic way that accounted for the extra strength by costing them spell power. For example:
You may use a spell slot to prepare a lower level spell. You may also prepare a spell one level higher than that spell slot, (but not greater than the highest level spell you know,) but you must sacrifice an additional spell slot from that level to do so (and cannot do so if you do not have the additional slots). For example, if a wizard had four 3rd level slots and could cast 4th level spells, he could prepare a 4th level spell in one of the 3rd level slots, but he would lose another 3rd level spell completely. He could only do this twice before running out of 3rd level slots. If he were able to cast 5th level spells, he could then use those two new 4th level spell slots to prepare a single additional 5th level spell instead.
And there are many other ways this could be done/balanced. In fact, I'm kinda surprised I've not seen a feat like this before.
Interesting?