Well, as a new 3DS owner, from what I've played of Pilotwings Resort, the PICA 200 GPU in 3DS a massive leap beyond the weak 3D hardware in the DS family, and thus the PS1 and N64 (which DS' graphics are comparable to). I'd say by about, almost 2 orders of magnitude. It's no PowerVR SGX (destined for NGP) but I'd put it slightly above the original PSP.
Yes, I also think the 3DS is probably a little bit better than the PSP at 3D graphics from what I've seen so far (meaning that it would be more than twice as powerful if it didn't have to do 3D) though multi-platform development could probably target both fairly easily. There is a maximum window of 2-3 years for that though I reckon if the NGP launches within a year, and probably only really profitable in Japan which still
has healthy PSP software sales.
Do you two believe Street Fighter IV and Res Evil: Mercenaries only look a little bit better then PSP games?, serious question.