It's not exactly the shortest explanation we've seen, but over at the official Sony Ericsson blog the company have confirmed that they'll be upgrading the XPERIA X10 to the latest version of Android. That is, they will do at some unspecified point; the issue is, as expected, the custom UI and Sony Ericsson's Mediascape and Timescape apps, which were built for Android 1.6 and will require re-working in order to integrate with newer versions of the platform.
"Then I introduce the signature applications; Sony Ericsson Timescape and Mediascape and the focus of the discussion shifts from talking about this layer on top of Android, that I refer to as the Sony Ericsson User Experience platform. I now find myself discussing the total experience rather the OS version in isolation with a great appreciation about what we are bringing to the table. Then the interest of the User Experience platform future roadmap gets to be the talking point instead. What I hope to get across to you all, is that there will be a software update for Xperia X10 that will upgrade the complete Sony Ericsson User Experience Platform based on newer version of the Android OS." Sumit Malhotra, Official Sony Ericsson Blog
The company reckons that - when considered as a whole software environment, with their customization works - even running OS 1.6 the XPERIA X10 holds up to the generic Android 2.1 competition. Still, there's no timescale for when we could see a newer Android build on the X10 - look at the delays in updating the HTC Hero for an example of how a promised refresh can take longer than expected - so the short answer is to only buy the phone if it suits your needs out-of-the box.