I have personally tested Tablet PCs 533 MHzCPU and 128 MB of RAM. Although these may pass as eBook readers they will not - I repeat NOT be the best bet for watching movies or streaming videos. From my experience, Android Tablets come in the following classifications:
1. Fairly Good
Entry level ePads come with processor speeds less than 533 MHz, 128 MB RAM and 2GB Internal Hard Drive are good for reading eBooks. Most Tablet PCs in this category will have Android OS 1.5 - 1.9. They're redeeming feature is the fact that price wise they are slightly less than OEM eBook readers.
2. Getting Better...
This category of aPads come with processor speeds starting from 533 MHz to 900 MHz, 256 MB RAM and 2 GB Internal Hard Drive. Its great for internet browsing, watching movies on YouTube and note taking.
3. Simply The Best
Although there are some powerful 7" aPads that compete with the ferocity of Apple iPads, the best aPads are usually 10 inches. Any iPad with at least 1 GHz (1024 MHz), 512 MB RAM, 4 GB Internal Drive with Android 2.1 or higher are considered the ones to get if you are a serious multimedia user. Watching HD movies is an amazing experience on these devices.
Not forgetting they also usually have bonus features such as webcams and a removable battery.
Why are some ePads Better Quality Than Others
The difference lies in the chip. If you look at YouTube videos in different models, you'll realise that some are fast and seamless while others have a lag. Some use 3G and some don't. Unlike ePads in the 3rd category, the video tends to fall behind and the resolution tends to be less sharp. Why? Because of the slower processor.
In closing I'll stress the importance of determining your needs before selecting the right tablet PC. Look at the description to determine exactly what you are getting for your money. Some tablets have all the basic components but lack powerful processors and the latest operating systems.
I believe personally that your happiness and experience with tablets in the 3rd category is very likely due to their high quality and ferocious functionality that can be compared to an iPad (for a fraction of the cost!)