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I think a digitial distribution model is the future for videogames but I'm not convinced that people are ready for it (in general) yet ...

Getting someone to pay $1 for a song or $5 for a movie is a very large challenge for content producers at the moment and I'm not convinced that any company could get more than a small userbase (in console terms) of dedicated people to move towards a full downloadable service if games cost more than $5 to $10.

To make matters worse, I think the high price tag puts the PSP go in the unfortunate position of being compared against both the iPod Touch and the Nintendo DS.