The age old question eh? Got a DS lite yesterday (my third now; kids have one each) and I already have a PSP. Don't want too many gadgets (aleady got ninja PC, Wii and PS3) so decided to get rid of one handheld.
So, PSP: nice graphics and custom firmware (emulators etc.) but a few years old (and a Mk II around the corner) or brand new DS Lite; pokey graphics but some cool touch screen games. Because I gave the kids my games when I got the PSP there are lots of DS games in the house inc. Super Mario Bros, Mario Kart, Guitar Hero, Zelda, professor Layton, Brain Training etc.
So, what would you do?