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To me the question is not what the PSP does, but is it the best PORTABLE. In terms of portability the DS has a number of advantages.

You can fold it up and not have to worry about scratching the screen.

There are no discs that can get scratched up or skip. 

No moving parts means greater reliability, longevity and greater shock resistance. 

It easily fits in a small purse or jacket pocket, no case needed.