No, the PSP is not a failure at all in my opinion.
It has a library of great games, from ports to original spinoffs of almost all of Sony's major franchises. Even now, we've got recent games like Little Big Planet, and games on the way like Modnation Racers getting a simultaneous release on both platforms (PS3/PSP). It's great! Nintendo certainly doesn't have all of its major franchises with portable versions. You get games like Lego Indiana Jones/Batman for example, where the PSP versions are identical to their console versions, while the DS gets some weird completely different version of the game. Not to mention the games are all $40CDN and under, with plenty of deals to be found both at retail and at secondhand shops.
I'm not even getting into the benefits of a hacked PSP, because I feel that doesn't really count. Even if the PSP had never been hacked, the quality of its game library keeps it from being failure. The stuff you can do with it when it's hacked is just icing on an already pretty tasty cake.
..and..
As for everyone that says the PSP Go is a failure, as an owner I beg to differ. The two biggest negatives of the system are that the entire back catalogue of PSP titles is not available on PSN, and the price. The actual system itself is amazing. The screen is incredible, the d-pad and buttons are so much better than my -2000 that it's almost hard to believe it's the same system. If they lowered the price and improved some of the older title availability, I'll bet more people would be going out there and getting one. It's hands down the best iteration of the PSP so far.
/my two cents