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There have been conflicting reports... well, maybe not conflicting, but some reveal a little bit more than others.

Some sites, such as Joystiq say they're done with the PSP perhaps because of piracy (it's implied but not said flat out). Gametrailers on the other hand says that they ceased PSP development to concentrate on the Wii. So, I guess we'll just have to wait and see what materializes from RaD.