Rarely do phones have cameras over .7MP. Aside that, a fraction of those phones do video, and an even smaller fraction are transferrable to another device for playback or viewing
The PSP's screen is perfect for such utilization. You could also apply loads of filters and whatnot thanks to the brawn of the CPU, and view the shots in high quality. This could also lend itself to in-game usage. EyeToy had it's own innovative usage for a camera. On the PSP, the range of gameplay options may be limited, but I'm sure a game like the one where you have to bounce the soccer ball on your head would be feasible, or a racer where you lean and duck in order to avoid obstacles, speed up, etc.. A microphone would be a must too, for Karaokae type games and other minigames (Like the one I had for PC where you must put your voice to the right octave within a time limit, or shouting out answers to a Brain Training-type game)
There's also that Augmented Reality technology. Can you imagine a strategy game where you use a real game board, and move about by physically moving yourself to see the map? That'd be awesome. Or it can be simpler, like AR Worms, or even just a trivia game.
It could also lend itself to making the PSP a popular IM Chat device.
Name a camera that does all that and connects to your PSP and I'd agree with you and send a hooker over to do her business.