Wowzz, while I agree with you you only have to look around forums to find people asking how they can find a free upgrade - usually paying passengers.
As an aside, it was once suggested to me that WTP was created (at least in part) to provide an upgrade for economy passengers. The feeling apparently being that the enormous difference between economy and club was genrating demands for upgrade and that if the upgrade was "only" to WTP it might dampen demand.
I think it's also appropriate to point out that some staff travel is undertaken on the basis of an economy booking with upgrade on departure if available; is it possible that's what you heard?