The cost of the unit is one thing, but the MSRP on games is a different matter altogether. Many people say that 3DS carts at £30/$40 are seriously pushing it. How will they feel about Vita carts at $50? That's conjecture, of course, but it would not surprise me in the least if they charged the console standard for retail games.
The real problem for PSP was that, outside of Japan, where everyone commutes, the market reality was that people did not see the point of a console experience on a handheld. In retrospect, if we look at the reaction to PSP back in 2004, everybody was excited at the idea of being able to play the kinds of games they had on the PS2 (and later PS3) in their hands. However, it then hit: if that's what the PSP is offering, why don't we just play those titles on the console and big TV? And that's what happened. We hear it all the time - so much of the PSP's library are essentially 'down-ports' of console games. You got your Grand Theft Auto, your Gran Turismo, your LittleBigPlanet etc. All competent, I'm sure, but when you can play essentially the same thing on the PS3, where it looks and controls better, what's the point? There were some noteworthy fellows like Patapon and Half-Minute Hero that carved out their own identity, but they're in the minority.
The PlayStation Vita had to avoid making this same mistake. Trouble is, the E3 showing seemed to be going down that same path. Again, it's the spiel of "console level graphics on this little screen, ain't that amazing?". And what are the headline titles? Uncharted, LittleBigPlanet and ModNation Racers, all already available on PlayStation 3, likely in superior form. Too early to say that history could be repeating itself, but they're gonna have to be careful.