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.