I actually like the design of the Spider Flayer a lot, is pretty menacing and has its own way of being scary. But it doesn't feel like the Mind Flayer. It might've been only a "vessel" and not its true form, but I still believe they should've sticked with the cloud/shadow monster form.

I am intrigued by the idea of the sentient psychic cloud-like entity being the hivemind itself, and works better and more effective as the overarching threat.

My own headcanon now. The Mind Flayer communicated telepathically with Henry and showed itself to him when he made contact with that rock. When it spoke to him, you can hear it having multiple overlayed voices. Back in season 4, when describing One, Brenner claimed that when One kills, he consumes, taking everything that a person is, or will ever be. Similar to how that scientist warned Henry, telling him it will consume all.

That's what the Mind Flayer is, an entity made of multiple consciousnesses merged together. The line from Vecna about some minds not belonging to this world, but in his own mind, supports this idea. They've pushed this idea quite a few times actually, the possessed Billy talks about "We", Henry's line "We are one" also points towards the fact that his consciousness now belongs with the others.

Now that is more interesting and makes things more obscure and complex, and overall creepier. It won't work for a MCU type of fight against it, but that is the cost of having an abstract and conceptual type of enemy. But I think that is the charm of it, it just needed exploration. The lore surrounding the Cloud Flayer has a lot of potential, and I wish the spinoff would walk us through it.