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I do think there will be a PSP 2 but i think Sony, as said previously, need to work on the software aspects of the console! Having the games on Flash memory could also be a good option as the load times with the UMD were a bit too long for what a handheld should be...

Touch-screens would be interesting but i don't think Sony would go down that route as they would basically be copying the DS...

All we need to do is wait and see if something is announced! I do like the idea of dual joysticks for FPS games though :D