Considering the PSP is now 5 years old it's to be expected that we'll be seeing considerably better graphics on handheld devices by now, at least on hardware about the size of an original PSP. We should still be seeing great graphics on smaller devices, so we can expect the next DS to be very nice graphically even if it isn't pushing the limits of handheld graphics.
A game I'm developing with some friends:
www.xnagg.com/zombieasteroids/publish.htm
It is largely a technical exercise but feedback is appreciated.