Well, firstly the PSP will not be released next year. 2010 at the earliest. It's not quite a sinking ship just yet.
Secondly, the PSP2 by a mile. We have seen that Nintendo no longer focuses on technology. The PSP2 will be more powerful than the PSP, for sure. The DS will have nowhere near the same level of power, because it is a very different console.
Having said that, Sony could realise that hardware isn't everything and only do a slight upgrade on the PSP, but there's no reason why Nintendo would say "Haha, tricked you", make a handheld with the power of the PS3, charge $700 for it, and promptly fail.
So, the PSP2 will be more powerful than the DS2. Hell, depending on release dates, the PSP could be more powerful than the DS2.