If this turns out to be real, i'll be shocked. And not in a good way. I really liked PS1, PS2, and even PSP. Though i'm a Nintendo fan foremost at heart, i've generally enjoyed all Sony's consoles up until the PSPgo. But i'll be damned if they aren't starting to drop the ball here...
So going on the unlikely assumption that this is true, i suppose we can expect 2 versions of the PSPhone-
1- we get to buy it for $600-$700 by itself without a contract
2- we get to sign a 2-year contract and get the system for $300-$400 and are required to pay for constant phone/data plans
And of course, this would undoubtedly be digital distribution only. As if PSPgo didn't already tell us that much. Fail for me, i'm getting back into purchasing my games, and in general, i ideally want to own a physical copy of the game i'm purchasing.
This rumor smells fishy as hell. If Sony does this, i'm going to be under the impression that they are extremely foolish. No offense to Sony fans, i consider myself one, but it sounds like a very dumb idea. If they end up being dumb enough to go through with it, seems like a very desperate attempt to keep a grip on their small portion of the handheld market. And i think they're starting to miss the point of gaming. Needless to say though, i'm NOT a believer in gaming on a mobile phone.