I own both a PSP and a DS + GBA Movie Player, also run a PSP site. Based on user feedback...
* Most of the users (even newbies) want to use PSP for video (and eh... pr0n).
* Most bought 1-2 games to go with their PSP and are waiting to get at least 1 more.
* Good games (and more are indeed coming). I personally like Metal Gear AC!D, Lumines, GTA, and Socom. Although it's more fun to play a "real" console game if you put them side by side. However they are very good filler games (waiting in line, waiting for friends, waiting for food, too lazy to walk downstairs in the middle of a break, travel, ...).
I believe the PSP momentum will sustain (based on reason 1 alone. haha).
The bigger problem, I feel, is: Sony is not focused on marketing PSP (perhaps) because of supply constraints. Everything about PSP marketing is scattered: the mobile web portal that Sony launched a few days ago, LocationFree TV, the new Media Manager software, ... It's hard for a newbie to get into (I always get questions from them). So perhaps when supply is no longer an issue, Sony can consolidate and market it better.
As for cell phones, I am in contract for a company to do cell phone development. It will be a long time before cell phone can be good enough to replace PSP. While the cellphone platform is "astronomical" in number and marketing guys like to quote them. In truth, it is still fragmented, short-lived (per model) and very inconsistent to develope on. Many operational issues after software is launched due to inconsistent, minimalist default configurations, or even changing configurations (The same phone can run or not run the same software at different times).
The games on cellphones are on an even more casual, trivial level compared to PSP and probably will stay so. I see people turn up their games and then off again after 15 or so seconds. That short attention span wipes out many game genres. The buttons are too small and screen too tiring. So I tend to take cellphone gaming marketing numbers with a large grain of salt just because they don't seem to match what I see in real life (China, US, Singapore, Taiwan, ...).
So yes, I believe PSP will sustain as long as more/better games are available.... and more digital content are available.