Nah, Sony is a very splintery company -- the music section doesn't really talk to the electronics section and neither really talk to the game section. I mean, think about it -- the electronics section makes CD-rs and CD-RW drives, while the music section complains about home copying on CD-rs
I think the one thing everyone's neglected about the PSP is the size. Big things just aren't popular as mobile devices. It's true in every portable market -- people want *smaller*, not necessarily more powerful. A big examples are cell-phones -- people will sacrifice more power for a smaller form factor in their cell phones. The ones that are out now are really, really small, and they keep getting smaller. Also, look at the iPod -- it's amazingly small, yet quite powerful, and despite the high price, people still want them because of their size. Why does everyone seem to want a nice new laptop? Because the newer ones are lighter and smaller than older ones, and most are starting to rival people's older PCs (since most people stop upgrading once they get to a certain point; I'd imagine very few people feel the need to upgrade a 1ghz system). And the GBA:SP has sold much better than the GBA, mostly because it's smaller and designed better. It's designed like a portable device.
The PSP looks like it's designed as a travel-mate type device -- something you plan to take with you for long trips or long plane rides, as it looks capable to not only play games but also to play movies (if you can find a way to transfer to the proprietary media, which I'm sure Sony will put some sort of stranglehold on... sigh...). None of the press released about the PSP makes it sound like a truly portable device, and look at it from the POV of an average consumer -- you're looking for a portable gaming device, and you look at the display model of the GBA:SP -- it's tiny, metallic, folds up, and really small, yet looks cool and you can see a lot of games on display behind it. Then you look at the PSP and you see a larger, bulkier unit, still looks cool and the screen looks pretty nice, but you know it won't fit in your pocket, and maybe you're just looking for a unit to play for those car rides that take 20 minutes, or when you're stuck at the laundromat for an hour, or you miss the bus and have to wait 15 minutes for the next one. One looks much more like something you'd rather whip out and play anywhere (GBA:SP), while the other looks more like something you'd play at home or on long trips (PSP).
Now, Sony *could* surprise people with a v. v. thin unit, which would solve the bulky problem, and might even help it fit into pockets better. But that would dramatically jack the price up, unless they discover some new way to manufacture TFT displays for pennies. I don't doubt that it might be a very cool portable console, but I'm rather skeptical about how it'll perform. Not to mention that if they put too many features in it, it might have the same problem the Xbox has -- lots of people buying the console, not many buying games.