There are quite a few threads about it already, some people say there is a difference, some have never been treated differently.
There was one hotel I was using on a regular basis for paid and reward stays. I was just shy of 100% for upgrades to a wonderful giant suite on paid stays. I was zero percent (with them apologizing once because it was a reward stay) for upgrades on reward stays.
I think it depends on the property and their procedures. Upgrades is the only difference, the breakfast, the water and cookies, etc have always been the same.