The PSP is not on par with the PS2 graphically, it's as simple as that.

god of war coo does look very good and so does wipeout pure

First of all its 1.8 GB and not 1.3 ;) Second of all, why should developers push it? They know that even if they do a half job it will still be the best lookign portable version, so they wont try to make it the best looking 128 bit version just the best looking pocket game ;)

Can it do much more? Yes it can, and games like Chains of Olympus, Wipeout Pulse, Syphon Filter LS and many others are proof to that ;)

What lots of people said.

First off, the disc space of the UMD is only 900 mb, dual layered is 1.8 gigs. Second, yes the GC had 1.5 GB discs, it also had a much stronger processor and such. Also, you can't have games that are that taxing on the hardware, because of battery life. Of course I could make a game that looks beautifully beautiful and have a streaming overworld, but you'd only play it for 30 minutes at a time.

Like someone said, Crisis Core takes place on very very small places. Intermixed with loading screens. The area's aren't big and when you're in a battle, you're enclosed in a small space, so that the game can render the monsters you're fighting. Most devs just find a good way to mask the shortcomings of the system in the gameplay.

God of War: Chains of Olympus is an anomaly though. Somehow it managed to get the scope of the console games, looking better on a handheld. I'm not too sure how they got that to work out so good, but it works awesome.

Also, a lot of devs don't put too much time into the system because they aren't expecting much back in return. With abysmally low software sales, why try hard, when you can save money?