1080i is a larger data stream mostly due to the horizontal resolution.
480i -> 720 x 480 x 30fps = 10,368,000 pixels/sec
480p -> 720 x 480 x 60fps = 20,736,000 pixels/sec
720p -> 1280 x 720 x 60fps = 55,296,000 pixels/sec
1080i -> 1920 x 1080 x 30fps = 62,208,000 pixels/sec
Also what compounds this is the fact that interlaced signals are usually a little harder to compress, so when compressed, the difference in bitrates is exaggerated.
However, to actually answer the original question, upconversion on HD channels is usually refering to originally SD content scaled up to HD resolution. This does not really make the picture quality much better, and is similar to what a progressive scan DVD player produces. The real purpose of this is so that the broadcast mode of the station is always the same, I.E., it is not switching formats when a commercial break comes up. As for 720p and 1080i, it is about an even mix on VOOM, some channels are in 720p, and some in 1080i. If you don't have a 720 capable set, then the box should be set on 1080i only output, in which the box converts every signal, 480i, 480p, 1080i, OR 720p to 1080i for display on your screen. This usually will not produce many artifacts, as it is harder to convert 1080i signals to 720p artifact free than the other way around.