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Let's stop comparing the PSP Go! and a $300 PS3, okay? The PSP Go! competes with the $275 iPod Touch while the PS3 competes with the $200 X360 and probably the Wii. Totally different markets, mind ya.
The "true" PSP (PSP 3000, as a handheld console) will still be produced after the PSP Go! launch costing $170