Total speculation on my part here but I think they won't bring him up to DH because they have ample guys currently on the squad who at any given moment could fill that roll. That in combo with him being 22 (He's been in AAA since he was 20 I think) the feeling has been yes he has the bat, but why rush him to the majors and hamper his chances of becoming a better fielder.
The one positive note is that my Yankee friend informed me that Derek Jeter had a similar issue coming up through the minors...granted, I'm not sure it was this bad. But still something to cling onto. If I knew where to find minors #s I'd look them up and post his errors #s. For Upton I've also heard the major issue he has is throwing errors (so if you go and see him, heads up to the fans in the first few rows behind first)