Its also worth looking at the timing of its release...
Its not going to be GBA:SP vs PSP, its going to be GBA2 vs PSP.
Nobody thinks that Nintendo aren't going to release a new GB by then do they? It will be very interesting, Nintendo are starting to get the underdog mentality back, they are not going to let Sony take away their precious GameBoy franchise. They have the name, the existing library (even if a new GB uses disc (IMHO it won't), they will add a GBA cart slot), the technology (Nintendo have alot of money in portable RnD) and the incentive to spend billions to ensure Sony are kept out. They lost the console market, they won't lose the handheld market without a fight.
On the software front, Nintendo have NES/SNES/N64/GB/GBC/GBA maybe even GC, Sony have PSX and maybe PS2.... Both will support connection to their respective consoles.
We live in interesting times....