The Vita has a lot of good potential. It's just not going to get there fast. Yes, the 3DS is making circles around it, but the 3DS is also likely to have a shorter console cycle.
But in the long run, titles and sales are only part of the battle. Sony has to drop their proprietary memory prices to market SD card values to compete.
The PSP was an amazing bit of hardware, but it was always limited by how expensive the memory was. Digital download games are upwards of 25% more expensive on PSN than for UMD forms once you factor the expensive memory card into the equation. Using the PSP as a video player? Doesn't matter that you can if you can't afford a memory card big enough to put anything on it.
(of course the real reason Sony did this was piracy. Doesn't matter if you pirate the game: you still need the memory stick. The developer gets the shaft, but Sony does well enough.)
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