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I've been doing a bit of research, as I'm getting one in August.

Great PSP Games:

God of War: Chains of Olympus

 

Daxter

 

Ratchet and Clank: Size Matters

 

Killzone: Liberation

 

Metal Gear Solid: Portable Ops

 

Patapon

Loco Roco

 

Jeane D'Arc

 

Crisis Core: Final Fantasy VII 

 

Archer Maclean's Mercury

Lumines

 

Burnout: Legends

 

Tekken 5: Dark Resurrection 

 

Wipeout: Pure

 

 Pursuit Force

 

SOCOM Navy SEALS: Tactical Strike

 

Great Features: 

 - Big, bright, high resolution screen
 - WiFi
 - Great media player
 - Customisable themes
 - Memory Stick support for game demos, portable porn, etc.
 - If you ever do get a PS3, remote play means that you can play games off the PS3 on the PSP, as well as watch
videos (including Blu-ray films), listen to your music, etc.
 - New PS Store allows you to actually download PSP games at a cheap price.
 - PS Store allows you to download PS1 games that you can play on it.
 - Skype Support
 - GoPlay, goCam, goNavigate (or what have ya) extend the features of the PSP.

Cons:

 - Thanks to piracy, the PSP has seen most of the big gamest that it ever will.
 - Still quite expensive for a handheld console.
 - UMD moves kinda failed
 - Battery life very short for a handheld console.
 - Even know the new version of the PSP is a great improvement, it's still rather large for a handheld. Baggy trousers
are a must.