In 2010 you can convert
as much of your existing traditional IRA account(s) to Roth as you'd like,
regardless of your income level. So you could conceivably convert a traditional IRA worth $1M if you want. It does seems strange that you may not be eligible to contribute directly to a Roth, or if you do you are limited to a $5K contribution, but you can roll an existing IRA of any amount into one - but that's how Congress set the rules, and no one has ever accused Congress of being logical. If you do this, you must pay taxes on the difference between the account value and your after-tax contribiutions - in other words, you pay income tax on the account's appreciation and any pre-tax contributions you may have made. Then you're not allowed to make a withdrawal for at least 5 years. After that, all withdrawals are tax free.
Here's an article from Schwab with more details:
2010 Roth Conversion: Look Before You Leap