First off, there are lots of Android tablets being sold... in the form of the Kindle Fire.
The problem from my perspective is price. HP showed you could get people to line up for a tablet not made by Apple - you just need to price it low enough.
I have an Asus Transformer - now running ICS. And I have a first gen iPad. And to be honest, I like them both well enough. But if I had to pick, I'd keep the iPad. There's generally more software for the iPad. I can cite lots of specific examples, like my daughter is studying for the Colorado State Geography Bee and there's really no good apps on Android for the Geo Bee. Meanwhile there's 3+ really high quality ones on the iPad. And, yeah, geography bee studying programs are a bit far from mainstream usage, but there's more. My younger daughter is learning to tell time - better apps for that on iPad. For learning/practicing algebra - iPad is better. My wife is learning French and last I checked for intermediate level French, the iPad apps were way better. So, from my non-rooting, non-custom ROM, when I look at which device we use more at home, it's the iPad.
On the phone front, I switched to Android and I don't think I'll go back to the iPhone, but for tablets, I think my Asus Transformer is headed to Ebay. We don't need two of them and they iPad gets used more.
My issue with Android tablets is that they are priced too close to parity with iPads meanwhile the iPad has better advertising, better name recognition, and more apps.
From my perspective, what Android needs to do in the tablet space is come up with a seamless user experience, price it cheap, they'll sell lots of them and the apps will follow. Like the Kindle Fire.