Actually, that's not true -- that's exactly what it does -- it adds information. Now, this isn't necessarily the same information that was there before it was digitized, but all the same, that's what it's doing. So it's like adding made-up details to stories when retelling them.
Here's the thing -- sometimes it's bad, sometimes it's good. The trick is to pick the good ones most of the time. It's not entirely fictional bits that it's adding -- they're interpolating, not extrapolating -- so my hyperbole is a bit overstated...but you get the idea.
As to making a good 16/44.1 DAC -- I agree, that is more important. But that's a different kind of engineering. Someone like me with a background in DSP would feel more at home trying to do a good job of upsampling in the digital realm, and then making it easier on the analog realm, whereas a good I/V -oriented engineer is going to concentrate on the analog stage.
The best DACs are going to have a bit of both.