I'm on slicehost, and when I upgraded ("resized") a slice, it was not a "live" operation. I don't know whether it's physically the same machine, but the old slice had to be shutdown, file system copied, and a new slice booted.
From the "Resize your slice" page:
Step 3: Current slice is shut down and migrated
You will experience a downtime varying in proportion to fullness of the filesystem.
When I moved from 1400 to 2800 it was a very speedy operation.