I bought a Sony PSP today
I love Sony stuff: my old (now broken) Vaio super-slim laptop, my 5 year old Sony camera, now the PSP: all great design and great toy-appeal.
My PSP came with the movie SpiderMan 2 - I will see how it is to watch a movie on the PSP tonight if I have the time. I have heard that Netflix is planning on also renting movies in the UDM format, so this might get interesting.
I have directions for streaming video from a PC to the PSP, but I am unlikely to have time to mess with that for a while.
I love racing games (really, the only kind of video game I play - I would rather watch paint dry than play sports video games - yuck!). I helped design and build a full motion platform racing car simulator about 9 years ago (force feedback on the steering wheel, great motion effects, SGI Reality Engine graphics). The PSP can not compete with a full on VR system, but it does compete by providing great game-play (assuming that games are well designed and implemented :-) I also helped write a networked PC Hovercraft game about 7 years ago - that was great fun, and I especially enjoy doing the "AI" for other vehicles in racing games.