They did work with Upstart, did all the work to integrate it with Fedora and RHEL, and have commented that they thought Upstart was very professionally written and reliable. The problem they found after implementing it is that its event based framework is fragile and doesn't solve the right problem. When they started looking around at other systems, such as launchd which runs the BSD-based Mac OS X, the found that using socket activation to allow services to be implicitly ordered automatically without needing admin intervention was a superior paradigm to the event framework that Upstart has. I believe they even looked at what it would take to modify Upstart to do auto-dependency resolution by socket activation and found that it would be too invasive and different and would break compatibility.
You can see the rationale yourself by reading blog entries by the creators or looking at recorded conference presentations on YouTube. systemd wasn't created on a whim, Lennart et. al. thought long and hard about creating N+1 init systems before tackling this problem.