To me it sounds like a modification of "to one up somebody", equivalent to "to out do somebody". These both basically mean to go beyond the quality or quantity of an action of another person. So, by inference, "to gay up" somebody is to be even more gay (by social manerisms, dress, lifestyle, etc) than somebody else.
Also, remember with a phrasal verb, the pronoun can only exist between the verb and its preposition particle. So:
To turn on the television or to turn the television on; but to turn it on
Since somebody is a pronoun, it would follow this rule. If you use a person's name, it could be before or after the preposition. But somebody, him, her, someone, etc. would be only between the verb and prep.
Poprosze, nie wiem jak sie mowi cale slowe po polsku. So I hope the English info helps!
Nie jestem do końca przekonany czy faktycznie zaimiek musi zawsze znajdować się między czasownikiem a przyimkiem (czy cokolwiek innego to jest) w czasownikach frazalnych, np:
I came across it and couldn't believe my eyes.