here are in my opinion the reasons it feels slow:
-underclocked to 800MHz (most likely for battery life and heat issues)
-older version resistive touch screen, not just that it is resistive, but it isn't cutting edge
-Android 1.6 was always a little glitchy and buggy, but it was the first widely available android environment, which is why most new devices run a more up to date version

Other things, why would it be updated, when the smoothness of multi touch wouldn't be important(resistive touchscreens don't support it, and that was a huge feature of 2.x android), also flash needs at minimum a version 7 arm type processor, EE has a v5 once again that is a major selling point of android 2.x.

At this point I would be suprised if I saw a major OS update for the EE.