Ok assuming that multitasking was really such a dealbreaker (i can see some instances where I'd like to have that capability so fair enough), if Apple decides to release multitasking on the next iteration of the iPad OS, which is fairly likely if customer demand was sufficiently high, would it tip the iPad into desirable status?
If I can play any content I want without converting it first, possibly, I would say it is acceptable. I would still hope for a Wide 720p native resolution screen since this is primarily an entertainment device with MOVIEZ being punted as a selling point and we live in 2010 and not 1998 - era of 720 by 576 (standard def) DVD.
Why wide? Because most movies are shot 16:9 aspect.
Why 720p? Because iTunes and other sources now provide 720p video - which can also be streamed. YouTube HD does.
Sadly seeing how the low res screen has remained in the iPhone and iPod Touch, I doubt we'll see this soon. Not until these screens become dirt cheap.
So yeah - with Multitasking, 720p 16:9 screen and hopefully more storage say 128GB SSD inside - it would be a nice toy/entertainment device for long flights/dentist waiting room visits.