Both WL and confirmed passengers can be upgraded as i know an incident of upgradation for two passengers who were in WL (30+) in NDLS-BCT sector in 3s. Confirmation of ticket and upgradation to 3A were done. in fact this chap was lucky enough, while travelling alone, to have 2 upgradations so far.
Also i know a family of four who were upgraded from 3s to 3a in NDLS -SBC sector, who were having confirmed seats from booking itself.
There was confusion about this upgradation bcoz the passengers originally bookd in 3a...
more... were arguing that seats were bookd by them. ultimately, tte had to be called and he explained to the other family abt the upgradation for them to 2a and settled the matter.
so both types of tickets are upgraded be it WL or confirmed. thats the conclusion.