I honestly think that the dedicated handheld market is going to phase out within the next few years. I am just thinking back, and in 2 years time (or so) the quality and the sheer number of developers of mobile games has increased significantly. Sure, there will always be a market for the next Pokemon, Mario, MGS (if they make them), SOCOM etc., but the market is surely going to die out and become consumed in mobile games for smartphones.
I know I am not buying either offering from Sony and Nintendo respectively, as I would rather just play games on my phone and get an emulator for the ones I really want to play on those systems.
EDIT: Don't get me wrong, I love what they are doing with the PSP and the PSP2, but I am just not convinced it will be a worthwhile purchase. Nice post, I always enjoy reading articles on the PSP.