About 7 years ago we had booked a 2BR Villa for cash. We had a total of 5 adults and 2 young kids, and when we arrived were informed the 2BR Villas were oversold (or whatever term they used), and they didn't have one for us.
We were a bit bummed (to say the least), until they informed us that we had been upgraded to - get this - the presidential suite at the BC! Stupid me, thinking that we needed all the room a 2BR Villa offered, asked the cast member, "do we really want to stay there?"
Both my wife and cast member looked at me like I had a horn growing out of my head. The cast member gave a very confident nod, and said, "Trust me, you want to stay there." If you've ever seen the Samantha Brown Great Hotels show where they do the Disney hotels, they showcase the suite. It was incredibly amazing, and needless to say we had plenty of room! This was really our first family Disney trip, and we were definitely spoiled by the experience.
So while it doesn't sound like upgrades happen all that often - they do occur! Have a great time!