PokéBase - Pokémon Q&A
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Red/Blue: Incredibly slow and dopey. It takes 5 seconds for it to feel pain when under attack.
Gold: It lazes vacantly near water. If something bites its tail, it won't even notice for a whole day.
FireRed: It is always vacantly lost in thought, but no one knows what it is thinking about. It is good at fishing with its tail.
Diamond/Pearl/Platinum: Although slow, it is skilled at fishing with its tail. It does not feel pain if its tail is bitten.

Using the Pokedex flavor text above, my theory is that Slowpoke uses its mind to "not feel the pain" if something bites its tail.

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It's ability to ignore pain might as well be because it's deep in thought, as stated in the FR definition.
So maybe that's why it's psychic: it's always in deep thought.