I think Square and Enix will just want to make 2D games with no FMV for the handheld market so there's no reason they wouldn't stay with the GBA. I don't think Square has any real loyalty to Sony and Enix has already stated its policy is to develope for the system with the largest userbase. In the handheld market, that's the GBA by a long-shot. But, honestly, even if Square-Enix did end up PSP exclusive somehow, it would still be a long ways from competing with the GBA. Even if every single person who's ever bought a FF or DQ game bought a PSP, it still wouldn't have anything close to the kind of userbase the GBA will have when the PSP is released over a year from now.
The only way the PSP could defeat the GBA would be if it somehow got all third-parties to abandone Nintendo like they did with the PSX and N64. That's just not going to happen. If anything, developers are apt to like the PSP less than the GBA because, with its superior hardware, there will be higher expectations for graphics which means longer dev-times.
Developers act like it's SO much trouble to develope for the GBA and its huge userbase. Now Sony has the nerve to ask them to put more effort into game design for its risky, upstart handheld. I don't see too many of them taking on the challenge.