So definitely no multitasking....Is multitasking a hardware or software function? I.e. Could a future OS upgrade enable multitasking on tablet or does it require an entirely different processor?
Software.
The iPhone can do multi-tasking now, if you jailbreak it.
A multi-core processor makes this "nicer", but is not required. IMO, Microsoft Windows got a huge boost in usability when multi-core machines started showing up, because you still have control of the desktop when an application gets greedy or behaves badly.
To be more precise, the EXISTING iPhone kernel supports multi-tasking. It's just Apple's sandbox that prevents third-party apps from using it. Built-in apps, such as the phone or iPod do multi-tasking now.