Custom firmware user here.
In my opinion, and this doesn't reflect all PSP users, but the PSPs true power is unleashed with custom homebrew/custom firmware enabled. This little black device is quite a little beast in terms of all the things it can possibly do. Playing NES, SNES, GB(A), PS1 games on a portable device is very neat! Also points to its physical expandability, I changed the faceplate and added a 4GB memory stick.
Its really a nice device to play around with.
While I do agree that there may be a lack of good titles on the PSP, I personally am not interested in the major DS titles that are selling (except new mario and yoshi island maybe) so I went with a PSP. I have like...2 PSP games (tekken and wipeout) and the rest I enjoy doing videos, emulator stuff and expanding its usability. But in all honesty I probably wouldn't have gotten a PSP if custom firmware didn't exist. And I do believe custom firmware is a factor in the low game sales too.