Gameboy Micro Rules!
I know the PSP is the hot toy on everyone's christmas list, but I love my Game Boy MICRO.
It's a 100% Gameboy Advanced (but not original GB from 1987) compatible gaming machine that is barely larger than a Gameboy cartridge. It has a VERY bright 2" by 2.5" screen 16:9 wide-screen LCD display. It's overall form-factor is not very different than the original NES controller.
What makes it so awesome is the size and portability It starts up instantly and runs forever on a single charge. It's so light that I often forget it's in my pocket. It's simply TINY, but totally playable. You can't go wrong with its price either. Only $99, and available everywhere.
PSP's clock in at over $250, weigh a ton, and require you buy all new software to play on it. Sure it does a lot more, but how much do you really need to do on the subway? The PSP doesn't replace your iPod, and even if it did, you can't game on it while listening to your music. It weighs a ton and you need to get a whole purse just to carry it around.
So I am down on the PSP, and big-time YES on the GB:Micro.