I'm not a PSP hardware guru, but I doubt it's a problem of maximum texture resolution. In fact, I'd wager the max resolution available on the PSP platform is something probably around the 4mpx mark (2048x2048)...
The real issue would be how many textures you can simultaneously keep in the limited amount of video and system memory. Streaming from raw media is an option, surely, but with obvious drawbacks. For obvious performance reasons, all textures onscreen (and quite a few offscreen) need to be held in main memory and ready to raster within 33ms.