I borrowed a friend's PSP last year and wasn't impressed.. So I went with a DS lite. Can't say I regret it, though I was hoping for more titles to better utilise the dual screens.
Went to the beach on the weekend and my PSP wasn't invited, but I did get to toy with it a little this morning. It comes with NeoGeo (MVPSP) and CPS2 (CPS2PSP) emulators and some pdf reader, I tried loading an avi video but it didn't work. I still don't know what firmware I have.