in some parts yes the PSP does beat the Iphone, but in most cases no the Iphone is more robust in hardware.

but its what you do as a developer with that hardware that is what matter's.

just right now it seem's many Iphone developer's are not exploiting the hardware. but that is on them, some may feel its not worth going to that much depth since the Iphone is mainly for mobile telecommunication's and not mainly a dedicated handheld game device. even though the Iphone can handle in depth game's quite nicely, It may have more to do with the Iphone's market than the hardware itself in my opinion.

The new Iphone is actually more powerful than the PSP specs wise.

Iphone's hardware isn't specifically built for gaming.All of the GPU and other certain powers can't be utilised for games.and it is a hell lot cheaper.Its production cost is around 90$ in china apart from all the other customs and duty shit

ALSO,Iphone's HW is revised every year with few improvements.

Well, since Wii is more powerful than PSP and iPhone is more powerful than Wii. I guess PSP is weaker. xD

i would not be too sure about that if i was you

example:

Microsoft: iPhone GPU support bests the competition

Microsoft has released Seadragon Mobile for the iPhone, Redmond's first iPhone app. Microsoft Live Labs says that the iPhone's GPU capabilities made it the first platform capable of using its Deep Zoom technology.

By Chris Foresman | Last updated December 15, 2008 10:52 AM

"The iPhone is the most widely distributed phone with a [graphics processing unit]," Daley told TechFlash's Todd Bishop. "Most phones out today don't have accelerated graphics in them. The iPhone does and so it enabled us to do something that has been previously difficult to do. I couldn't just pick up a Blackberry or a Nokia off the shelf and build Seadragon for it without GPU support."

Though Ballmer stated last year that Microsoft was content to stick with Windows Mobile, it's clear that Apple's "whole widget" approach has garnered significant advantages. Even Microsoft's own engineers seem to think so, as evidenced by a "large number" of them attending a recent Seattle iPhone developer meeting. With Apple positioning the iPhone as an all-purpose computing platform and its graphics capabilities on par with other gaming handhelds, expect to see more pioneering graphics technologies make their way to the iPhone.

how the hell do you know

dunno about orignal i phone , but the 3gs is certainly more powerful than the PSP in terms of hardware spec, the lack of buttons makes it a bit harder to get the type of games you play on psp and when they do there pretty bad. but there are alot of pick up and play games i play on my iphone, but for core gaming stick with a PSP.

I have both and i certainly havent stopped playing on my psp, just because i got an iphone, graphics dont make the game, controls are by far more important for alot of genres.

As far as power, the iPhone has it. As far as game quality goes, the PSP is all over it. Of course, none of that matters, I still do almost all of my portable gaming on my DS, the least powerful of them all. Graphics only matter to a certain extent, then it's game quality and interface quality.

IPHONE is POWER!!!

A TellTale dev once said that the iPhone was more powerful than the Wii. He backed it up by talking about RAM, which the iPhone certainly has more of, but it's a pretty dodgy metric to use to determine how 'powerful' a system is. If the amount of RAM is all that counts, then HD consoles are just two iPhone GSes duct-taped together.