If upscaling did increase image quality the consoles would last much longer. Upscaling is a simple process in which a algorithm (sometimes stored in software, sometimes in the hardware like in many Blu-ray players) interpolates (that is, guesses the contents of the extra pixels). Since it doesn't actually have the data the best it can do is guess. This process cannot add detail to an image but it can make it appear sharper / more defined, which is why some people say it improves the image quality. This mostly applies to TVs though, as detail is often lost due to the large size of the pixels. Have you ran a computer through your TV and noticed that you have to lower your resolution so that text is readable? Same effect applies to other media.