Rupee Upgrade Bags?

[spirit0flight]

I have just gotten past teh Gordon section but i found i couldnt even take all the Chests with rupees as i have 300 all-ready,

where is the first upgrade bag, do you purchase it or come across it later?

 

[A RAND0M TAC0]

if you have a pair of bugs go to the girl in her shop at hyrule castle, shes in one of them, actually theres a guy looking in the window, thats the place you want

 

[deity_link]

you only need 1 golden bug to get the first upgrade (I think 600 can't rember) and you need all the golden bugs to get the 1000 rupee wallet

 

[Half Empty]

What part of Castle Town is she in? I can't seem to find her anymore..