To make this work for retailers, I'd bet it will be heavily marked up. Also, it will require a good solution to storage via either large SSD or flash memory or take SD cards, not the stupid Sony memory stick, but the universal SD card.
Eitherway, I think by focusing on both pure gaming as well as smart phone will be disastrous for them as neither product will get supported fully and will allow Nintendo to walk away with it again.
People buy iPhones, Droids, and Blackberries because the cellular company pays for 80% of the cost of the phone due to contracts. Having a PSP that is fully featured like a smart phone w/ 3G/4G will only increase its price beyond mass market.
Nintendo won't do that. The 3DS will be sub $200 and will sell like hotcakes. Sony should focus on costs management and build a solid game experience.
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