Why do you think there's no need for GDDR?In my view, there are a lot of details that aren't so obvious but still make sense that make it convincing.
We'll see. Many of the XMB rumors so far have been true. The timing is right also. Now that they are locking down on what they are doing with Home, they also know what basic support and functions they need in XMB in-game. And GT5 Prologue is coming soon with online (figure the connection out yourself).
I'm buying it. You can come back and taunt me here later.
Well, I'm thinking that it'll hold some FB(s) for the OS. Press the Home button and it'll switch in, composited with the game. In theory they could switch to it, and copy the XMB buffer from XDR. I was also thinking that you'd be using DDR to downscale PS3 output to PSP, but if you have Cell doing that job, you'd handle it in XDR. You don't need to go through RSX if you're beaming the frame to PSP.
It'd also be a smart move by Sony to appease developers. A major gripe with PS3 is the smaller VRAM available, and it's had repercussions. If Sony can remove the GDDR overhead, there'll be less work for devs, PS3 wouldn't suffer from inferior textures, and everyone would be happy. So I can see it as something they'd aim for.