Android Smartphone > PSP/DS
PSP2 needs touchscreen, a accelerometer (I really wanted to play Mercury Meltdown with a accelerometer), and to be smaller, to compete with those.
Or they could just make a Android phone with better GPU/CPU/battery, make games for it that take advantage of the hardware and call it PSP2 or PSP(Playstation Phone).
No one is gonna carry around 2 devices. I was thinking about selling my PSP after I had gotten the phone. By that time I got kind of bored of the games and used it for movies, but the phone can do the same thing and is smaller, more Portable, better hardware than PSP1.
The only advantage a dedicated console would have would be the battery and CPU/GPU, the phone has portability, size, touchscreen, accelerometer, connectivity, and if they would make a hybrid device it would be a epic win.