To answer the last question first (netflix/youtube), NO. You will not be able to use either site on the device. It does not support flash.
And you will also not be able to upgrade the Android version either. There may be a way in the future, but right now it doesn't look likely. This is why there are so many used ones in the Amazon marketplace. And why I returned mine to Amazon last week. I am holding out for a new model next month. One that will be able to do both of those things and be able to use ad-hoc wifi properly.