I agree that the Vita could easily find a niche within the market. But in Japan, Sony's biggest selling title is Hot Shots Golf. They have one franchise that does anything of significance there, and that's Gran Turismo. We're not seeing any titles from Capcom, Konami, or Square Enix, companies that have traditionally supported the PSP very well.
Square Enix has FFX-HD coming still, and yes, if Sony doesn't have a GT Vita lined up for the very near future (within the next 12 months) they're utter fools.
And why is that? Because Sony isn't putting out enough big-selling titles to build up a sufficient userbase. These are all of the retail titles coming to the Vita in America for the next six months:
03/19 Dead or Alive 5 Plus
04/30 Soul Sacrifice
04/30 Zombie Tycoon 2: Brainhov's Revenge
06/25 Muramasa Rebirth
09/03 Valhalla Knights 3
09/17 Killzone: Mercenary
09/24 Ys: Memories of Celceta
"Next six months" is a vague time frame to choose and chops off the holidays. Tearaway is also supposed to make it out by the end of the year.
Also, note your choice of the phrase "retail titles". The Vita is not tied to retail, and we have comments from management within the industry claiming that the Vita is much stronger on digital distribution than any other platform in a retail:digital ratio. Given that digital distro has lower overhead and higher profits this is clearly a plus with regards to it getting 3rd party support.
It is also why that release list massively explodes when you include digital distro titles like:
Frozen Synapse
Binding of Isaac
Hotline Miami
Abe's Oddyssee New n Tasty
Guacamelee!
Velocity Ultra
Kickbeat
Bit.Trip Runner 2
Rainbow Moon
And these are just the ones I could think of off the top of my head. The Vita doesn't need retail to deliver games, and in fact most of it's strongest titles avoid retail entirely. The only threat here is retailers not carrying the system itself if retail software sales are too weak, but then they aren't that bad, peripheral sales are always the high profit items for everyone involved, and big box stores and online retailers carry many break even hardware devices with no software at all attached. Add that the PS4 compatibility will allow Sony to push retailers to tie the PSV and PS4 retail spaces together and you have a solid foothold in retail for the hardware for at least the next several years.
During that time Sony can continue their focus on digital distro with the Vita and likely parlay many of the indie bridges they're trying to build with PS4 into additional Vita support.
Even the Gamecube, one of the most drought prone consoles in the history of gaming, never had droughts like these. This is similar to the type of support the N64 had in 2001, when it was getting phased out for the GC, and even it had bigger titles than Soul Sacrifice or Killzone (Paper Mario).
Paper Mario isn't bigger than SS or KZ for the Vita's target demographic. Sony isn't trying to win the 4-12 age group or Nintendo fans over with the Vita. They're looking to service their traditional 15-30 age core gamer demographic with a handheld. Those people by and large don't care about Paper Mario. They like MonHun in Japan and shooters in the west. SS is meant to appeal to the former, KZ appeals to the later.
Almost all of these titles listed are going to be available on other platforms. Not saying those titles are bad, but they aren't supposed to be the your main titles of significance on a platform; they're supposed to be supporting titles for your big sellers.
Again, the major titles aren't. Cross play is currently being used by Sony to entice 3rd parties onto the system's small user base, same with allowing PSP up-ports. The major IPs Sony is bringing (your main complaint here is after all their support) are exclusives. SS, KZ, Tearaway for this year in particular and probably more at GDC/E3/TGS.
Do I think games like Sly 4 and Ratchet & Clank: FFA should have been Vita exclusives? Sure. But then Sony sent those out to 2nd parties who actually get nice bumps from having their games sell as many copies as possible and neither was destined for great sales to begin with. It's entirely likely the only way funding them made any financial sense was to be cross play.
Some of Sony's main development teams are openly dismissive of the Vita. And at least Nintendo did a Nintendo Direct when they found out Wii U sales were poor and showed off their future lineup. Sony didn't do enough to make their platform a success.
Nintendo is trying to carve out their own media walled garden, just like they do with all their relationships with their consumers. Walled gardens are safe and controllable, that is why Nintendo does Nintendo Direct.
Sony will likely continue to address the future of the Vita at major industry trade shows like they have previously. If nothing worthwhile is shown at GDC/E3/TGS then you'll have a point, but so far Sony has brought something of worth to every major trade show since the Vita has been alive.
All it's going to be in the future is a PS4 peripheral, and that's depressing considering how much thought was put into the console.
I'd say it's a bit early to make that leap of faith. It's barely into year two of it's life. If the price drop and some year 2 software result in even a little hardware sales momentum Sony can definitely slow burn the Vita into a healthy market for software. It has already had some nice sales comments form major 3rd party publishers (Ubisoft on AC3:L) and indie devs (RCR developer) alike. That is the first step towards more meaningful results. Will it ever be a powerhouse console? Probably not unless it catches it's own exclusive Puzzles & Dragons/Pokemon/MonHun phenomenon in Japan. But it can still move 25-30M units of hardware over the next 5-6 years and be a profitable device for Sony and the publishers/developers who service that install base.