The problem I find with the very cheapest tablets is the screen. They are typically very poor quality TFT affairs that suffer from dreadful viewing angles and colour banding. This renders the tablet quite useless for typical use cases such as viewing media. I would recommend spending slighty more to get an IPS display.

As for upgrading, I think most of the cheap tablets can easily be rooted and upgraded using a custom rom, though I haven't yet found the time to root mine (Sumvision Cyclone Astro+, which came with Android 4.0).