I think they jumped the gun on trying out a download-only system, they should have waited until retail and download were releasing simultaneously like Nintendo and Sony on the PS3/Vita are doing before trying anything like that. The vast majority of people were pretty much hard-wired into buying PSP games at retail, I think (haven't got any numbers to support that, only anecdotal evidence), and really it would be smarter to create a large focus on the machine's download capabilities early on before trying to say "OK, now here's a model where you can ONLY do that".
There's also the part where Square couldn't release the Kingdom Hearts games on PSN, and given that Birth by Sleep was the last Big Fucking Deal on the PSP, you need to have that on the store if you're gonna have a model with only that store.
Noble pursuit, but definitely jumping the gun. That said: probably still a decent machine.