The funk thing is something I've pondered over for ages and as always, frustratingly, it boils down to feel. I bet Nil Rogers (Guitarist from Chic) could make anything sound awesome. However a pointer would be:
1. Use a fender stratocaster or something very similar. i.e you need single coils really.
2. Keep it clean and ease your guitar volume down a touch.
3. Try taking all the "middle" out of your amps tone settings.
4. A little bit of chorus can help but don't over do it.
5. Then its all down to really tight rhythym, muting and feel and a few thousand hours of practice.....
Oh yes I forgot, the wah wah pedal is very commonly used - its funktastic. Makes a wah wah sound!! Buy one immediately.