Damn, you're a lucky kid....PSP now, 3DS on your birthday in May...I have to wait until my may birthday just for my dad to ALLOW me to use my OWN money to buy myself an old PSP 2000!
Anyway, ya. DS on PSP is really just a tech demo.
The emulators on PSP that are worthless for playability are:
nullDC PSP (sloooooooooooooooow)
Yabause PSP (slooooooooooooooow)
Virtual Boy - red dragon PSP (the coder kept his source closed and didn't code any input support so nobody knows how well it actually runs -_-)
everything else is pretty pwn as far as emulation. DaedalusX64 is actively worked on and surprisingly runs well for the limited hardware it's on, and any lower systems run flawlessly, save for a few FX chips in the SNES.
As far as PSP games go, there is a LOT to like. You just have to look a little harder.
Let's jus put it this way tho: if you owned a ps2, you WILL like some of the psp's selection of games, as many are PS2 ports *cough*Persona 3 Portable*cough* or at PS2 quality *cough*Daxter*cough*. There's also the two original flagship psp franchises with 3 games apiece: locoroco (1, 2, midnight carnival) and patapon (1, 2, 3 coming in march)
You'll find something to like.
Oh, btw, it might be a good idea to get a stronger battery for it if you don't have it constantly in the wall. The life IS as low as they say it is.