I don't believe PSP has, or ever will have, the sw releases/sales to make it a competitive system to DS. Just look at the decline its had at TGS, developers have already shifted resources. It's carving out a nice niche for itself in the same way N64 and GC did, for certain types of games, which is impressive for a handheld, but it's missed the, 'it's a system I must have', boat.
The Dragon Quest series, along with a load of other big 3rd party games are coming soon, and they've proved they can sell very well. Also, Nintendo is the most important developer in terms of system sellers and broad reaching titles and they're always going to be exclusive to DS. They have over 70 titles in development for the system (including deals with 3rd parties) and in there will likely be more Nintendogs, Brain Training type successes from their best teams. All of these things will continue to sell a lot of DS hw. There's also probably going to be another redesign.
IMO, contrary to what many people here want you to believe, Nintendo is only just getting started with their success strategy and Sony is continuing to lose sight of what the mass market wants, which is something they managed so well with PS1 and PS2.
For Sony to claw back their former sales they have to accept their current strategy has failed, which is something they seem unwilling or unable to come to terms with. This is the same for many 3rd parties.