I have a psp but only really play WipeOut on it. I was a big wipeout fan on the original PlayStation.
the format is good if you want a protable games machine. probably very good for kids in the back of the car on long journeys. The games choices, as with most portable games machines, are limited with those games available being, almost, cut down versions of the console formats.
Personally, at present I think for the money the Nintendo Wii is looking a good christmas bet. I'm still wanting the XBox 360 but that's a good deal more expensive.
Overall... PSP is good value if you really want a portable games machine. It will show movies and play music but the format is not easy to break into (You end up having to buy the discs or pay out a lot of money for a large memory card and then spend time 'ripping' a dvd to it) If you want music of movies go for an ipod or equivelent.
*** Just my thoughts - feel free to ignore ***
K.