I don't htink the rumor is retarded at all. As much as I'd hate a UMD-less PSP, it makes sense from a piracy standpoint, and it makes sense if they're trying to make the next PSP more of a competitor for Apple's products, to prevent the iPod Touch and iPhone from stealing marketshare.
Plus, the release of Patapon 2 in NA shows that they are seriously considering a DD-only distribution model in the near future.
The only issue would be for those that want to upgrade, but have all UMD games. Most games are available in both UMD and on the PSN now, but if you already bought a game on UMD, they'd have to work out some plan for you to obtain a downloadable version.







