At first I thought "No way!", but the more I think about it the more plausible the whole story seems to me.
And already being an owner of an Android phone myself, I have to admit that I see an important advantage of such a device compared to current Android phones when it comes to gaming: The proper D-pad and buttons. Current Android games only use the touch screen or motion sensors, and there are lots of games that simply do not work out very well without a proper D-pad. For example did anyone try running SNESoid on Android? They place a virtual D-pad and buttons on the multitouch screen. That's the best you can do if you've only got a touchscreen, but it needs quite some time to get used to it and then it still doesn't work that well. Plus, that way you're hiding large parts of the screen with your fingers.
I think it would be a clever step for Sony. Copy-protection would however be a problem in the current stage of Android. But as far as I remember Google is already addressing this with the next Android release (so being Android 3.0-based seems even more plausible) , but I would still expect this to be a problem.
Oh, and Google would really need to accept more methods of payment for the Android market, because so far they only accept credit cards. That works fine for the USA, but in Europe hardly anyone is even using them. For example the only reason why I haven't bought an app from the Android market yet is because I don't even have a credit card. I cancelled my last one years ago sinceI had to pay a yearly fee for it but never even used it, and I definitely won't order a new one only for buying apps from the Android market.
