Every TV with more than 480 lines of resolution upscales (=upsamples). Some scalers are better than others, some tuners are better at resolving TV signals than others, some signals are better than others.
Resolution is a very tiny component of picture quality. Has this set been calibrated?
Many of us are delighted with the SD quality on our HD LCD sets. It would not be an enormous surprise if one of the least expensive HD LCD sets sold had a worse PQ than pricier sets.
Incidentally, this is a very very common topic of discussion on this forum.