It will cost no more than an iPod Touch. Mark this space if you disagree.
As for having visuals that "rival" the PS3, lower resolution output aside, which requires fewer resources in terms of GPU/CPU processing speed and VRAM/RAM to achieve similar results, it's doubtful unless you consider a 960x640 output (likely the max the PSP2 will see at best) an apples to apples comparison.
Of course if SCE manages to source or design a 3.5-4" 1280x720 display, I'll be the last one to complain.
As a handheld, it still has to be passively cooled, and in all likelihood, won't even have passive heatsink integrated into the design.
Best comparison would be the iPod Touch 4G in terms of hardware, which itself is capable of some pretty impressive visuals in games.
But if engineers had the capability to actually shoehorn the processing capability of a PS3 into a pocket computer, SCE would turn the current PS3 into a console the size of a paperback book and save big on production, shipping and warehouse costs.
