I don't think the point about Sony's target audience with the PSP is even valid. The success of any console depends greatly on how large the user base is, and although there are games with target audiences, the idea of targeting a console's possible buyer is just stupid, and Sony knows this.
For example, look at the GameCube. Most casual gamers and Sony fanboys have labelled it as a "kiddie" console, although Nintendo has stated they intend to appeal to gamers of all ages. This reputation of GameCube's "target audience" has not helped sales, considering most gamers today are not "hard core" gamers, and wouldn't be caught dead with a purple lunchbox that plays "kid's games".
Looking at the Playstation 2's success, it can be seen that its established base eclipses both the Xbox and GameCube. This is the key to Sony's success with their console. Because the PS2 has such a large user base, Sony does not have to rely on in-house games to push sales, but instead pushes a large number of third party games that appeal to a smaller fraction of the people who own a PS2. Sony is a company that works off of sheer quantity over quality to stay alive in this industry.
The bottom line is that the high price of the PSP should not be considered to have any sort of demographic, because if companies don't sell consoles, they limit who can buy their games. I see the speculation of the price point of $350 to be more of a realization by Sony, perhaps, that putting all those pretty specs and features in the PSP cost a lot of money. Money which Sony is not willing to lose at a rate that Microsoft has lost because of the cost of making Xboxes. The real challenge, therefore, is a tough balancing act of trading loss of profit on consoles with expected profit of licenced software, while maintaining an appeal to the majority of the handheld market. IMHO, Sony is relying on their name and the PSP's technical appeal to push a ridiculously expensive piece of hardware in a market which they have no idea how to approach. Anyone with a head on their shoulders shouldn't waste their money on buying a handheld PS2 (I can't really say portable, because it has been stated that the PSP is not meant to be played "on the go"). The real test is will the brand of Sony be able to overcome the already gigantic hurdles the PSP faces (price, battery life, funcitonality and value of extras like UMD movies and the ability to function as a quasi-walkman, and of course Nintendo)?