They have to make it powerful; sure, unlike, say, Android smartphones, it's a single platform which they can program more effectively, however if you so much as program a modern smartphone correctly, it'll obliterate the PSP, at least graphically.
A read a rumour that it'd sport the SGX543, which is an enhanced version of the 540 found in the Galaxy S. It has to be good enough to distance itself from today and tomorrow's smart phones.