Prolonging the life-cycle of the platform is pretty business related IMO.
The speed increase of the PSP together with the addition of some previously reserved memory (mentioned by some devs here) will certainly breath life in a new generation of games for the PSP. Developers are given resources that will help them make sequels of games that can really feature an improved look and feel, which will help motivate the consumers to buy the sequel.
Perhaps the PSP games were starting to stagnate after 3 years, perhaps Sony wanted to give the games a boost when the new model was released.
There may also be more than one cause for Sony to motivate their down-clock decisions, perhaps battery life on early PSP units was one, perhaps noise issues on early PS3 units was another one and perhaps both were in conjunction with life cycle considerations.
Distributing the game improvements evenly over the life cycle of the platform sounds like a pretty smart idea in my ears, the more you are in control of it, the longer you can stretch the life cycle. I am sure Microsoft, Nintendo and Sony partly achieve this through the regular updates of the SDKs and APIs that they make available to the developers.
Yeah... but wouldn't the companies that are working on cross-platform titles who struggled to get their product to run even half decent on PS3 and then still ended up with an inferior product (which costs them dev money and sales) be pretty pissed off. PSP does not have direct competition or a product for which cross-platforms would be expected to be of the same quality... so the decision must have been simple.