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hasn't PSP gave Nintendo a run for the handheld market? I thought the PSP division is in a healthy state for Sony...

Again, I doubt Sony is going to put much effort into R&D for PS4.... just make PS4 having 2 x Cell Processor, put some more ram, redesign it and call it the PS4...

Seriously, with the PS3 laying the ground work, Sony's got a pretty solid ground to build on for the next system... Why would anyone think Sony is going to put more money into R&D for PS4... Not to mention that if Sony do use the "upgrade" approach for PS4, development for games would be quite easy too having similar structure, and Backward compatibility is probably in there too.