I fail to see where Sony offering movies on the sticks circumvents everyone else doing like they've been doing for ages (i.e. downloading it for free, shoving it on the memory stick, and watching it that way anyway), but this doesn't bode well for the survival of the PSP or Sony in general. Tip to interested developers - If it's going to be used for games or movies, call it that, but don't sell it as a swiss army knife if you're not going to deliver one.
I'm going to be blunt with it: Guys, you've had your fun, but it's time to get back to letting the programmers do their part in the game industry.
Since approximately 1998, the Video Game Industry has been dominated by pushing for a (potentially destructive) upgrade cycle. Any console bought today is presumed to go obsolete (or at least stop having games made specifically for it) within the next three to five years, with the POSSIBLE exception of the mobile platforms, although if Nintendo is any indicator, we suspect that even its innovative DS will be phased out within this span given enough effort.
The bad news is that unlike computing (where new programs and machines constantly push the upper bounds), video gaming can only push so far under a series of constraints. At some point the price market won't support the new 'bleeding edge' games because as we're already seeing with the Sony PS3 predictions, users won't stand for another price hike in their games, a factor that can matter more than the console for particularly hardcore gamers (or even a moderate family of gamers - the collection of PS2 titles that me, my brother, and my sister have amassed over the PS2's span probably cost several times more than the console itself did - respectable for a console that's come down as the PS2 has, but prohibitive for something like the PS3).
The only way that most gamers will be able to justify early adoption of the PS3 (or any other high-end console) is if they honestly feel that the console in question has lasting power. Backwards compatibility has helped to maintain a market for older games, but in older consoles this is unheard of, so the approximate lifespan of a console needs to be reasonably long enough for the average user to have picked up their money's worth over several years. For a portable system, this is child's play; for a $600 behemoth, not so much.
Memory fault -- brain fried