PSP is a pretty big success actually, with more than 50 million consoles sold, otherwise you'd have to think that the 360 is a terrible failure with only 35 million consoles sold...
PSP is the best selling non nintendo handheld console ever, and as someone pointed out, one the overall best selling handheld consoles ever.
The recent released games in 2009 included stellar hits like LBP, Persona 1 and 3, Motorstorm, Gran Turismo. And 2010 will be even better with MGS:PW, Kingdom's Heart or Valkyria Chronicles 2. The years we're in now are the best PSP years ever.
Now it happens that this gen, there's also another competitor surfing on casual games which manages to sell more. So be it... Both consoles are successful, and they are mostly aimed at different crowds. There ARE core games on DS, but clearly that's casual games which define it.
It's no surprise the DS aimed at the casual crowd sells more than the PSP which is aimed at core gamers. The same way it's no surprise at all the Wii crushes the 360 in sales... My grandmother and my young nephews want a Wii / DS, not a 360 or a PSP.
They're even not really competitors actually, the same way the Wii is not really a competitor to the HD twins...