It has a "cellphone" type virtual keyboard, you access it when you enter a field that has text input or the web adress field.
Of course it's not as good as a real physical keyboard, and you move in it with the directional buttons and confirm a letter entry with pressing O the required number of times (or I think X in the US model),
but imo it's better and much faster when you get used to it than the virtual keyboards where every key has a virtual button of it's own and where you have to move the cursor a much longer distances to find the required key.
I can "type" quite fast already with it, so that even web "chat" sites are not too much a pain to use. If you're used to sending text messages with your cellphone you should have not much troubles getting used to it.
The browser is quite good, it does give an error message "out of memory" occasionally, depending on the site, and lacks flash and I think some javascript things can cause it problems, but most well designed pages show just fine, yhou can select wether you want to view the page "as is" scrolling vertically and horizontally to see the whole page on the smaller PSP screen, or make it fit on the screen when it reformats the page to fit, and a third option that I've not used as it messes the layout completely like in some cellphone browsers.
I've used the PSP quite a lot in replacement of magazines in the toilet recently