Sony's digital download only handheld device PSPgo for as cheap as it's been in the UK! HMV had this at £148.99 for one day only back in November, but now it's (practically) the same price on Amazon.
The PSPgo has had it's critics, due to it's lack of UMD drive, high price tag and questionable slider design, but I like mine. The reduce size and weight actually make it a lot more portable than the old PSP, and the built-in flash memory makes it easier to carry tens of games with you all the time.
You should be warned of the prices of games on the PlayStation Network. Even though they are digital only, they can often be more expensive than the physical UMD available in shops (which you cannot use with the PSPgo). A parital solution is to buy PSN cards at a reduced rate (you can get a card worth £20 on the PSN for about £17 - current cheapest is a place called 7dayshop:http://www.7dayshop.com/catalog/product_info.php?cPath=777_15&products_id=107144
). This means you only pay 85% of the PSN price, though this doesn't necessarily make it as cheap as the UMD version :-(