The whole PSP == Media Machine ads that I see (the only ones really) seem silly as I imagine only 5-10% of the buyer base for the PSP bought it as a Media machine mainly, and not as a gaming machine.
I'm not sure what they're trying to push, but until I can watch DivX encoded videos on my PSP without a ton of effort, I don't have a lot of interest in it's media capabilities.
Game wise the PSP and DS both have great games, I play them semi-equally really, BUT the multiplayer is so much more rewarding on the DS... the only non-local multiplayer game I have for the PSP (Syphon Filter) is a terrible game to play online... unless of course you're in one of those "clan" teams that get a bunch of non-clannies in a game and then just repeatedly owns them.
Yeah, the multiplayer scene for the PSP is terrible for those who don't have a bunch of PSP owning friends... and it might even be bad with them. Each of us, my wife, my two sons, and myself, own a DS, (the 8-month old doesn't play too well though!) meaning that when we want to play multiplayer it can SERIOUSLY be a lot of fun.
It's kind of sad that of all my PSP playtime, I would say most of it came down to Lumines, Katamari, and (equal to those two put together) now Breath of Fire 3... an old PS1 one game.
I would have MUCH more gladly paid like $150 or even $175 and given up the media capabilities of the PSP. The point I was trying to make is that it's just not match for the other technologies in place to handle those media formats... if you want to watch non-UMD videos you use a computer, not your PSP.
It's so large that using it as an MP3 player is a step beyond silly, not to mention even the smallest MP3 players have a full 1+ GB usually to devote to music, usually more like 2-4GB, and you'd have to sacrifice all that space OR swap cards continually to make the PSP's MP3 player match up in just space considerations.
I guess those new ads are to make the "gamers" realize that they can use their PSP for more things... like meeting up with hot girls you apparently slept with after getting so drunk you both just kinda fell into it and don't remember the other person at all. (Good thing she keeps a cheap 32MB card with videos on it for you to track her down after though!)
I think a lot of people have realized that support for multiplayer games as well as single player games is becoming more and more an important part of the gaming community, especially with the advent of computers as wide-media gaming tools. The PSP had a lot of potential, but is failing miserably because most of it's multiplayer is local and I've honestly never met another person who owns a PSP... it's a much more rare device for non-hardcore gamers because of price and education levels, whereas the DS' simplicity makes it ideal for even older people and parents of younger kids to own.
The PSP Homebrew scene has a lot more potential than the DS, thanks to it's power and natural ability to be more useful IF you can find a way to run things on it. That potential is being wasted by Sony however, as they could REALLY make a lot of money if they created maybe a UMD or firmware upgrade (maybe even an optional add-on that you can run from your card that you have to pay for) that would let non-mainstream game developers actually USE the PSP.
Of course, there's a lot of legal issues with homebrew... what if someone writes something malicious that ruins your PSP? Sony doesn't want to get sued over that, and EULA aside, people COULD still bring legal action to bear on them. In that sense if they support Homebrew at all they're just opening themselves to dangerous action from upset users who don't take care when dealing with user-created materials.
Like so many other things, including the DS, it's just a lot of currently wasted potential; the PSP's potential is just a bit more wasted than others as it stands.