Text editor that supports italic text and tab indenting, via keyboard shortcuts
Documents To Go is a very good app. It provides the formatting requirements you wanted and supports creating and reading Microsoft Office documents as well as Google Docs.

It supports word, excel and powerpoint. It can be found on the Android market https://market.android.com/details?id=com.dataviz.docstogoapp&amp;feature=search_result 

There is a free version but I believe this only let's you view not create or edit documents