I imagine there will be whatever developers want to put on it, the price of the application is up to the developer but obviously the lower it is the more you're going to sell. Is it better to sell 5,000 copies at $50 or 100,000 copies at $10?
Sony missed the market once with the minidisc vs. mp3 wars, and IMO they'd have to be stupid to not see the writing on the wall here. For all but the kiddy or hardcore gamer market a "smart phone" with a large touch screen is probably going to be the game device of choice. I think it has a chance to become the computing device of choice as well (portable use as well as docked), but they're not fast enough for that, if you've ever used an iphone to surf the web you know that while cool they don't compare to even a semi-recent computer for site loading. I'm not talking specifically the iphone here though, but that type of portable device.
Also did those patent links change? I don't see any multi-touch or even really PSP references in there, just something about creating graphics from sound file (a visualizer? lots of prior art there) and a way to allocate processor resources which just seems to be a smart scheduler.