I'm not an expert on cabinet installation..just an everyday housewife, but I have a question that pertains to housekeeping:)

Won't the small gap that you are thinking of leaving accumulate dust that would be difficult to keep clean?

I think the height of the uppers needs to be determined so they are the proper distance above the counter. And I would take into account the height of any light rail you may want to add to the bottom of the cabinets.

Plus what kitchenaddict said.

the old ones were at a normal height from the counter so it's not really significant plus or minus 1 or 2 inches...

as for the dust, it's a valid point but secondary in importance.

I'd take them all the way up to meet flush with the bulkhead. I decided not to take my cabinets to the ceiling and I seconding guessing that decision, and my cabinets have not even been installed yet.

Every picture I see now has the upper cabinets going all the way up to the ceiling, so it's definitely the style right now anyway.

Good luck with your decision!

Either put them up to touch the bulkhead or put them lower, but cover the gap with moulding because it will look like a mistake otherwise.

Also do consider the height above the counter carefully, as suggested by numbersjunkie. In my old kitchen the cabinets are installed too low (a custom job in the 60s; maybe the homeowner was short!) and I cannot fit some appliances beneath them (I am also short, but I hit my head on the corner of the range hood all the time!). If I were to remove my cabinets and leave the bulkhead/soffit then any new ones I install would also be too low. Plus or minus 1 or 2 inches may actually make a difference to what appliances you can fit under the cabinets. Measure your tallest appliances (coffeemaker; food processor; blender?) and make sure what you want to sit out on the counter can fit under there with any lighting or light valance installed.

There is a measured distance from countertop to bottom of upper that is code! Check in your state, but the general rule is 18 inches.
As for the gap up top, best to avoid it.
Good luck!

Were your old cabinets also frameless like Ikea? If the bulkhead will sit over the doors and it isn't 100% true you could find the the doors will rub. If this is the case then you need to drop the cabs slightly to give the doors clearance.

In my Mom's kitchen the back wall (one with the sink) bulkhead was only as deep as the cabinet boxes so they could have been installed flush to the bulkhead but because the intersecting walls bulkhead was so much deeper at the corner over the sink she had to have a 1 inch spacer along the top over both runs. She didn't have enough height to use a moulding.

The answer will be easier to find at the end of the kitchen reno process.
There are multiple factors still unknown.
Like, for example, how dark your space will be once it's done.
I like brickton's idea about being ready for lighting, as it might look good.
It will be easy to close the gap with a trim piece or drywall if you go that route.
At any rate, that gap is what will take your planned "error", and by that I mean margin of error.
For example, if you raise your counter, you will want the wall cabinets to be higher too.
Plan to make no decision about this gap until you reach the end of the build.
The ideas above are all good to keep in mind.

Why not extend the cupboards upward to meet the bulkhead? Could you put lighting atop it also?

thank you all and especially caryscott for mentioning the door clearance issue. for sure i would have had the problem. I will leave a gap and close it off with trim later.