Is it because of the nature of it's encryption protocol? I'm assuming there are other reasons as well, but I have not been able to find any information about it.
Basically it's about the main difference between TCP and UDP - udp packets are fire-and-forget ones, but tcp's are much more strict and simple to handle. The working with UDP as a transport for Tor itself has it's uses, but I'm sure that it will be implemented in a future: there're too many bonuses in doing so that it simply can be ignored. If you want to transport UDP for your hidden service, for example, - just use OpenVPN! TCP was the "first and most universal/wide" choice, and it's better implement a single feature, but good - rather than ten of them, but badly: we've seen the Microsoft approach on features, it stinks :)
IMHO: - this is my very personal opinion:
- Privacy concerns in Tor FAQ about non-tcp packets revealing OS are ridiculous, this can be handled "not so hard"
- The "DNS resolver excuse" is an issue that must be fixed regardless of IP support, even if it will be still just TCP only supported