The piracy is hardly the primary combatant against the PSP, If that was the case, the DS would have suffered the same fate, or worse, considering it was far easier to pirate on. The simple cause of death is that these machines are just not built for a western audience and without a Mario or a Pokemon to scoop up the kids, you're not going anywhere other than the fringe, whereas on the flip, ever since the PSP caught it's second wind with MH2G, it's been bombarded with their particular taste of software and hell, still continues to be.
Sony especially has a very niche setup with their type of library and their first party kit on these machines and they're literally chasing the same exact element with the Vita thus far. Believe it or not, highly priced handheld editions of niche Japanese games and scaled down B-tier shooters is not going to cause a tizzy. I don't see this hurting or helping, it might spur a few more hardware sales, it might have a small effect on software, but it's not going to be noticeable when you already have the system in the gutter.