Great thread on upgrades. Unfortunately, I can verify that this doesn't work with Virgin -- they appear happy to allow their Upper Class cabin to go empty rather than offer an inexpensive upgrade. When I enquired about this on one of my flights (I was in Premium Economy) it would have cost more than I would have paid booking in Upper Class in the first place.
Some airlines, for instance America West, allow you to call ahead I think 48 hours to see if there are any upgrades available. They have a sliding scale for pricing based upon the length of the flight. For example we paid only $50 p.p. to upgrade to business class from Vancouver to Vegas, and we had a few drinks so it was nearly no cost at all. However, on international flights, I have had very limited sucess in upgrading at a reasonable amount.
On another note, has anyone subscribed to the First Class Flyer newsletter which I have seen advertises a few times here and there. If so, did it help you in getting better rates or obtaining upgrades for reduced rates??