North Carolina has one of the most consistent performing football programs outside of the Big 10, so any team beating them in a bowl game is an upset. Baylor's a Texas team, though, and the Texas football programs at any level are nationally recognized as being one of, if not the, best.
It is not an upset that Baylor beat North Carolina in the Russell Athletic Bowl because of Baylor's record. Before the game, North Carolina had 11 wins and 2 losses while Baylor had 9 wins and 3 losses; these records are fairly close, so it was within reason that Baylor could win.
Baylor is missing two of their star quarterbacks. Their win against North Carolina in no way is an upset. The quarterbacks will be out for an extended period. They will be lucky to repeat this type of success going forward. North Carolina made some key errors, and future teams are unlikely to be as unlucky. Baylor is a strong team, and so is North Carolina; however, without their quarterbacks, Baylor is going to have a tough time against next opponents.
I have no interest in sports to begin with, so no, I do not consider it an upset that Baylor beat North Carolina in the Russell Athletic Bowl. And why would I? Good for Baylor. Everyone has a fair shot at winning, and fanatics need to cool it and save their time.