I remember reading an article about the designer of several GameBoy handhelds (Pocket, Color, GameBoy Advance and GameBoy Advance SP), in Edge's Equip series which was released in 2003. Back then, he already stated Nintendo was working on the next GameBoy handheld.
It was before Nintendo DS was revealed, so I am wondering wether Nintendo had two handhelds in development at the same time? Iwata said DS's success would affect the timeframe for the next GameBoy (more success = GameBoy is pushed back).
Also, he said he was still thinking about the incorperation of media features like music and movies. I feel Nintendo would have had an insane success with GameBoy Micro, if they had put some flash memory + MP3 playback in.
Will PSP push Nintendo into a 'multimedia' device or wil they stay with pure gaming devices? I think they will take the middle road and try to find a balance between cost and features. Besides, most people already have MP3 players, Mobile Phones,... PSP will be priced lower over the coming years, Nintendo will have to anticipate that (more cost/value).