Upconversion doesn't just increase the number of pixels, it creates the new pixels by blending them into the real pixels in the original image using mathematical interpolation--in essence filling in the space between the real pixels by estimating what the new pixels would have been like based on the pixels that already exist.
If all upconverison did was add pixels by making duplicates of the existing pixels, you would just end up with the same large, blocky picture you would have had if there had been no upconverison.
Simple interpolation tends to make the picture look less sharp, as it blends the real pixels together. Say the original DVD signal had a black pixel next to a white pixel. This would produce a sharp edge transition in the original image, but in the upscaled image, the interpolation would add pixels of varying shades of gray that would appear to blend the black into the white. This reduces the harsh pixelation you would notice if you blew a DVD image up on a large screen, but also makes edges softer, giving you the impression the picture is less sharp overall.
Some upscalers are smart and try to preserve edges, so the picture not only looks smoother overall, but still looks as sharp as the original.
Some upscalers use edge enhancement to create an image that appears sharper than the original image, but it can also lead to objectionable artifacts like halos around edges and somewhat of a "cartoony" look, with black lines around edges.
The Toshiba XDE-500 uses proprietary technology to do what, to my eyes, is the best upscaling I've seen on a DVD player, but some people absolutely hate the results as they see what is called "ringing" on the edges which to them looks annoying and artificial. Up close, I can see ringing also, but at normal viewing distance, all I see is a cleaner, sharper DVD picture (the result varies with the DVD, though--some older transfers, or generally poor transfers, look noisy, so I turn the sharpness feature off on those).