Knox's answer is correct, but I wanted to elaborate a bit.
The price for an individual bond increases as interest rates decrease.
If you buy a bond that pays 5% at par (100), and next year a similar bond yields 3%, people will pay a premium if you sell the 5% bond (which varies based on a number of factors, but the bond would sell at a rate greater than 100), since you are yielding a higher interest rate. Conversely, if rates go up, that 5% bond will sell at a discounted rate (less than 100).
With VIPSX (the Vanguard TIPS fund you referenced), the fund's portfolio page has alot of useful information, including a listing of the specific bonds in the portfolio.
TIPS bonds are also a little unusual, because the inflation protection gets added to the principal -- so even if there isn't any inflation, the bonds prices will still fluctuate as rates rise and fall.