Depends on total design of CDP/DAC, just because a unit has upsampling DAC doesn't mean it will sound better then one that doesn't, but it has the potential to if other design issues are properly addressed.
The reason the original signal is upsampled, by adding dither, is noise atrifacts can be removed easier without harming original signal. The type of DA filtering used is crucial to perserving natural sounding high frequencies,
and overall natural detail and focus.
There are other issues, jitter control/clock design, use of audiophile grade capacitors/resistors, control of EMI/RFI and many other design details are needed to make a great sounding digital front end.
Also because of this many cheaper external DACS sound better than very expensive CDPs with built in DAC. The last 3 yrs has produced more improvement in digital sound than the previous 20, upsampling is one piece of this puzzle.