Simple explanation:
A standard DVD player outputs a standard DVD picture at 720 X 480i (interlaced) or if it's capable of a progressive output, then it's 720 X 480p.

A high definition player (HD-DVD or Blu-ray) will output at, 1280 X 720p or 1920 X 1080 (i or p).

An upscaling DVD player can't create new information (pixels) that is not there to add on to the standard def picture. What it does, it takes a standard def DVD disc (720 X 480) and with the use of a processing chip, it samples the surrounding picture and makes extra copies of the pixels that already exist and then adds this copied information to the 720 X 480 pictute to output it as 1280 X 720 or 1920 X 1080.

The quality of the processing chip will determine just how good of a job the copying and adding will be. Players that have processing chips from Silicon Optix or Anchor Bay will be very good at it. Besides the upscaling end, good processing units will have a number of user adjustable filters that will help.

The bottom line, IMHO anyway is, a good upscaling player can make a standard def dvd look better, some times much better, no where as good as a well authored HD-DVD or Blu-ray DVD to begin with.