APC's site would be good for research on these, but from memory I think the Back-UPS range (cheaper) are as you describe. The Smart-UPS range (more expensive) are true UPS.
EDIT: Apparently, that's incorrect. Both switch to battery in a matter of milliseconds, but the Smart-UPS range do more filtering and can adjust for brownouts and spikes. And Smart is Sine Wave output rather than square wave. APC do even more expensive true 'online' UPS.
I've got a Smart-UPS attached to my server at home, and it's been fine during powercuts.