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It sounds like an Android smartphone that happens to play PSP games.  Meh.

I like the idea of a PlayStation Phone, but I'd want it to be a full successor to the PSP (PSP2), and I'd want it to have the PSN/XMB at its core, much like the PSP/PS3.  Any Android features I'd like to be secondary to PS functionality, and I'd want it to continue and improve upon the PSP's functionality and compatability with the PS3.

This just sounds like an X10 with buttons and a section on the Android Marketplace for PSP titles.  No PlayStation Store anymore?

It doesn't feel like a true PlayStation product.