Snagged one of these a couple weeks ago. I'll have to say this is a HUGE improvement over the original model. A few reasons.
1. Better D pad and analog nub. This allows me to play some of the fighting games much easier than the old crappy analog nub or a shitty D pad that wouldn't function well on the right side.
2. Better screen resolution. I like how the screen is much sharper and detailed. There's no real ghosting or dead pixels like the originals.
3. TV Out. Sure the UMD movies look kind of assy on some screens, but the games look pretty impressive on a larger screen.
4. The opportunity to DOUBLE your battery life. If you have your old PSP batteries, you can buy a special case to hold it and it will in fact double your battery life (no having to charge the damn thing after 3 hours of use) which leads me to the other ability to charge via USB; I would have put those seperate, but since it's relatively the same subject, I'll keep it at 4.
Of course the new PSP does have a few drawbacks.
1. You can watch UMD movies on a composite cable but you cannot play games; you will need to hook your PSP up to component cables to a TV with Progressive scan in order to play the games.
2. The new battery doesn't really make much of a difference in battery life. I'm not sure, but if they were trying to improve the system, they could try to improve the performance in the batteries.
3. No second analog nub. Sure this is sort of a trivial matter, but when you've been used to PS2/PS3 games with dual analog controls, it would have been coold to add an extra nub. Perhaps in the PSP2 model.
4. The face buttons seem slightly smaller (maybe it's just me, not a real gripe since I can handle them just fine, it just seemed that way.)
Overall, I would recommend picking one up if you have the money to burn; there are a few games coming out that do look like the PSP could really shine such as Final Fantasy Tactics, the Dracula X Chronicles, and Crisis Core Final Fantasy VII. The improvements do make the machine a worthwile investment, but current PSP owners will feel a little gipped at the fact they did some add-ons, but that's the price you pay for being an early adopter.
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I had the old PSP for a while but was very unhappy with it and traded it in. A shoddy library and the analog stick sucked. I'm glad they've addressed some of these issues but I'll probably wait awhile before considering buying it again.