Isn't the psp already dead outside Japan? The problem is the software, not hardware. I don't think we need a psp2, it's Sony that needs to encourage third party developers.
DS doesn't have the same problem because it has a bigger userbase and it's cheaper to develop, that's why it has more support.
As for the software sales , I don't have any thoughts. We can't say that the probem is piracy, even the DS has piracy. Perhaps the piracy is bigger on the PSP, but we can't be sure.