Concerning William's 5 points in post #10 of this thread, I have no reason to doubt that what he is saying is very often the underlying cause of desk/upgrade (un)availability issues - my concern is why these reasons aren't communicated to the customer?
I feel that "bad news" is at least partially mitigated when it is accompanied by the reasons why the situation has come to pass - if one hears a rational explanation, it DOES help lessen the disappointment - and it provides the properly-trained desk associate with the ability to "save the day" with some kind of gesture to soften the feelings of frustration on the part of the customer.
Unfortunately, as long as hotel managements see and treat desk staff as disposable chattel, rather than the people who are the literal and figurative face of their brand, the bad experiences will likely continue.