I draw your attention to the fact that only one game came out for the PSP this month in Australia (UEFA Euro 2008) and there's only two more games after than until the end of August (Iron Man and FF7: Crisis Core). Over the same period, the PS2, an ostensibly superseded console, has five releases.
I don't think I'm being premature in saying that the PSP is thoroughly into its twilight; these are the sort of release schedules that you expect to see on a system once the next-generation model has been out for 6 months or so.
Sony, for all their vices, aren't terminally stupid. I'd be very surprised if Sony are not almost finished development on their next generation handheld. With rumours flying around about a new-model Nintendo DS, it's worth keeping your ear out for something much more interesting coming from Sony. I'd put money on something lighter, easier to hold, with improved battery life and a vastly streamlined connectivity profile. UMD will be out the door, possibly in favour of non-physical media.
It'll be interesting to see the plan for taking on the Nintendo DS giant.
EDIT: A better source puts the Europe-region PSP releases to August at 16, versus 19 on the PS2. (Compare to 47 on the DS.) It may be that the discrepancy is due to shorter announce-time on releases in Australia. Anyway, even with larger numbers, I'm happy to stand by the rest of my comments above.