Sorry for the lateness of this reply--I just stumbled onto this board and registered etc.... I was one of the accepted posters and I was extremely surprised to hear from UIUC so early! I did get the letter via postal mail, it was slim and I thought they were missing something from my application or was rejected or something awful and was pleasantly surprised to say the least. Speaking with just a little information on the subject, it looks like they accept a couple students in January (I saw another acceptance posted a couple days after mine) in order to nominate them for a Graduate College Fellowship. I am assuming that there will be another round of acceptances that will offer TAships and/or other forms of funding. Unfortunately this is mostly speculation and surmise, though, I am sorry I cannot be more helpful or give you a definitive answer. I wish you all the best of luck and if I learn anything during my correspondences with the department about future offers of admission I will let you know!
About the MA/PhD discussion--I have a MA already and was offered 5 years of funding (they did say that they would offer BA candidates more years of funding). I did see on the website that they prefer to have students get MAs there, so I thought it would count against me when I applied, but apparently you can be admitted with an MA from another institution.
Again, I wish you all the best of luck!