Incorrect. When audio upsampling was first introduced into the firmware, it only worked on disc based sources. This wasn't compatible with XMB multi-tasking either, but since most people play back music from the HDD while browsing, they wouldn't have noticed before.
I hate saying this, but I find people's comments about audio upscaling a bit naive. We know that the DVD upscaling is pretty good, many people claim they can't even tell the difference between DVD upscaling and BD playback. Now while I think that's overstating it, it's clear that the image quality can be improved through upscaling. If you look at sound-waves, wouldn't you think that it could in fact be just as easy or even easier to upscale this? If anything can be improved in quality by 'adding bits' surely a lot of music can be enhanced a fair bit by upscaling.
For me personally, initially I was struck by the difference in quality between playing back an original CD, and playing back the version I copied to the HDD. At some point I realised this was because back then the upsampling wasn't applied to HDD sources. Even now I can clearly hear the difference, and I'd be surprised if most people on this forum can't with even a modestly decent sound system or headphones.
I also believe that if you have a 5.1 surround set, then even if it only supports 44.1 inputs, the upscaling to 5.1 means it can theoretically upscale the audio resolution by a factor of 3 (6 channels versus 2).
It´s a BUG, i disabled any kind of "upscaling" and 2.0 to 5.1 conversion. It should just play it at 44.1 khz and not spend time and energy on creating some weird 48khz conversion that most likely uses some primitive conversion technique.
It used to play 44.1 khz just fine, unless they suddenly apply some kind of magic Mojo to 44.1 khz as well that requires bundles of resources, it´s a bug.
I agree with the upscale part, it was first when oversampling was introduced that CD´s started to sound like they were marketed. It should sound better with the high samplerate and 24bit upsampling.