I'd have one if it weren't an Android phone. Don't get me wrong I do like the OS. But I prefer a jailbroken iPhone to a rooted Android. But I do miss being able to make that decision freely. I screwed up my jailbreak last week and here I sit with a regular iPhone and this thing is as bland as watching C-Span in black & white.

Thats because they didnt demand the same kinda royalties like on handhelds. Windows phones dont make money either

Both Xperia and PS Vita are selling poorly, it's a niche product. Also software wise I don't think sony have OS software expertise to make a android/Psvita Hybrid or even a phone OS.

M$'s own phone division might not be doing so hot, but M$ still makes money off of every Android phone sold, due to patents. They will make money off of every PlayStation phone made as well. They've changed up their mobile OS 3 times and just made a mess of it. Finally, they are where they want to be with a unified 10. So, the ground work has been laid down. They've lost Nokia in the process, but that was a big burden to take financially to begin with. Establishing a new OS and gaining it's popularity is no easy task. Years before, simple OSes could survive in the mobile space and most manufactures could profit. iPhone changed the whole mobile game and only a few can survive now.

Apps will be a hindrance. These days if you want apps to become available on your so you need the install base, and in order to get the install base you need the apps. Unless something revolutionary comes along that appeal to all, not just gamers, launching a new OS won't get you far. It's the same circle of death that Windows phones faces

Vita OS is already similar enough to work as a phone OS, so I'm not sure why you think Sony doesn't have the software skills to pay the software bills. 

I don't get those statments either. The Vita OS is already a very stable and well layed out mobile OS. It is also already built on ARM processors, which any future PlayStation Phone line would have to be built on in order to allow easy porting of ios and android apps. 

The only thing the Vita OS needs is more RAM and a little faster CPU/GPU combo to open up it's multi-tasking features a bit more. This would be easily obtainable if Sony rolled Sony mobile into PlayStation, and put the people that have built the Z series phones in with the PlayStation engineers.

At this point Sony has the tech to make an industry leading Mobile line-up under the PlayStation name. They have the ability to make the standard slab phones with nearly 48 hours battery life with moderate use. They can easily put together a Vita-esque phone that can last even the most hardcore mobile gamer 24 hours of gaming, talking, texting, and social mediaing.

They have the OS, they have the Tech, and they have the brand name to make it work. Now they just need to make it happen.

If it did not use Android it would have 0% of success.

Have to 100% disagree with that. Android is not some fix-all solution. Running android is a me too way of doing business, and it is the reason no android competitors can touch samsung, or make any money in the mobile market. 

If Sony ever was to move to a full on PlayStation Ecosystem for both home and mobile, the goal would not be to dominate the market from day one. The objective would be to build a substantial userbase of premium customers. 50M PlayStation Phone users is a better business for Sony than 200M Xperia/Android users, because Sony gains continued business beyond the day 1 transaction.

The PlayStation Mobile division if it ever becomes a reality will have obvious hudles to clear. If they build to the core market, they can obtain the base needed for a sustainable business. Once they have achieved a strong and profitable business model, then they can work on expanding, and competing with ios and android. 

The same business plan is already in place with PS4. Build the ultimate game machine and market heavily to the core gamer base creating a profitable premium paying userbase. Expand the system to a more casual users through expanded media's (ex. PlayStation Vue & PlayStation VR) adding a wide varity of non gaming and social content. Then continue to use the new expanded offerings to strengthen the bond with the core user (ex. Machinima and Dreams), more gamer related content through non traditional media's. 

I'm waiting for a phone that allows me to play decent handheld-level games on it comfortably.

The only problem with this that I see is the cost, and the power of the device.

Like it or not, even mid-level ($250) devices nowadays have 1080p screens, 8MP/5MP camera combos, 2GB RAM, hexacore processor chipsets - it's expected.
Oh, I'm not talking about the cost of the device.

The problem I see is how developers - western ones, at least - are going to get onboard with this idea.