Design for the present or the future? Product Scaling

Should UX designers be designing for the short term or long term?

I'm fairly new to UX design. I'm working with other UX designers who are trying to create a UX design for a demo coming up in a few month. I am suggesting that we should first have a design that accommodates the heavier duty version of the software that will come later down the road ... build the base functionality (decide on a menu, base functionality like allowing the user to have their layout). Then, for the upcoming demo, just implement those features management set as requirements for this upcoming demo.

Their solution was to divide the UX team into two sections. The section that things about the design due in a few month a separate section will design for the long term.

My concern is that the short term design will become the official design. It will end up not being scalable. The design for long term will be thrown out and that teams time will be wasted.

Would like some advice on whether a design should be for the sort term or long term and how to go about developing a design for the short term (throw something together to get feedback on) while still having something to display for the short term.

If there is any documentation on this topic that you could point me to that would be awesome. I'm not googling the correct phrases to get back any documentation related to this topic.

EDIT: The Story of the Ribbon has some great advice for redesign of already existing software. Excellent advice which is not counter-intuitive.

EDIT #2: Andrea comment helped me figure out a better google query. searching for "redesign of old software" gives a lot of good articles on how to tackle such a challenge. ex: How To Tackle The Ultimate UX Challenge: Legacy Systems