Minor upgrades (standard view to pool view) happen all the time. Major upgrades (POLY GV to LV for example) are much rarer. Upgrades to a higher resort are VERY RARE and are only likely if an entire resort was closed.
I suspect Disney may overbook BUT they have multiple resorts in the same category. If All Star Movies was overbooked you might be offered Music or even Pop Century but you'd be setting yourself up for a MAJOR disappointment if you won't be happy with what you reserved.