I'm in London now - I brought a DS, to play *Canvas Curse* and *Fire Emblem*, but did not bring a PSP. As I understand it, the PSP is outselling the DS in the states and the DS, mostly due to Nintendogs, is creaming the PSP in Japan. I have a theory that the DS will overtake the PSP in the states.
What's awesome about the PSP is its 3D. Which raises the question: what is 3D for? It's usually for providing an immersive virtual experience. Which a handheld simply cannot deliver, no matter how good its graphics are, because the screen is too small. So if you have a handheld game, you want it to be a game-game-type-game, rather than the sort of funhouse thrillride game you'd want on your Xbox or PS2.
And that's where the DS is shining: the stylus makes it great for games that engage you on that other dimension. It's playing to the handheld strengths.
Of course, hindsight is 20 - 20. Up until I heard the DS was creaming the PSP in Japan I thought Sony was going to win.
And I could easily be wrong. With the success of the iPod it seems like sometimes style is a lot more important than substance, and the PSP has the DS beat hands down on style.
Going to practice my talk now.