LCDs have the image you see drawn onto them multiple times per second, and the manner in which this happens dictates 'scanline' effects you can see. Pixels draw in rows called 'scanlines', which are usually invisible due to the rate at which these images are redrawn, much faster than the human eye can generally detect.
In the most typical case interlacing 'simulates' ~60 Frames Per Second being drawn to the LCD (abbreviated FPS as you probbaly knew) with approximately *30* FPS, drawing every OTHER vertical line of the next frame, instead of doing the whole thing at once. This is a feature, not a bug, and is used on TVs and DVDs et al to make ~29.97 FPS look like a full 60 FPS, which is more in line with the number of images the human eye can capture per second, providing smoother animation of the drawn images.
However, screen timing, programming glitches, LCD manufacture quality and style, and the way your eyes personally work, can affect whether this interlacing process produces the appearance of lines moving downwards on the display or 'old' lines from the prior frame as they are being redrawn. Some equipment and software combos are more prone to it (The GP2X's display) and some less (the GBA, most transflective PocketPC displays, TVs, etc.) and some people's eyes can pick up on it more than others. Mine don't readily pick up on it often.
I hope this is a decent explanation.
