Don't forget that when we are talking about European figures, the PSP was only released in September last year ... ! People do tend to forget this.
Also, DS games have been cheaper mostly, so that helps the software sales. What doesn't help software sales is that the PSP demographic is much better at getting illegal copies going, and that the PSP can be enjoyed a lot without software, unlike the DS.
I'm starting to see groups of kids playing Burnout Legends against each other now though (a very popular Budget title), so that should help sales. I also noticed that on Play.com, the three best selling PSP titles are all Budget.
Eh, except now, it is Pirates of the Caribbean. Jeez. And people wonder why publishers are suckers for licenced games - regular john is too, apparently. Anyway, the NEXT three games are, in fact, no ... wait ... the next TEN games are budget titles! Then, and only then, Loco Roco (best I've seen is 4th).
I think the arrival of budget titles will help the PSP as a games platform - it definitely helps with the multiplayer fun.
I've been playing Burnout Legends myself for a bit and must say it's very good.
In my opinion, Japan is showing the PSP development as you'd have expected it initially. Just look at the prevalence of the GBA - 32 million in the US, 16 million in Japan ... Normally, everything else being equal, these figures will influence the uptake of the DS and PSP. In Japan, the DS is a runaway hit and a logical choice for GBA owners, and has been significantly cheaper to boot. The fact that people still buy the PSP in significant quantities means that it offers something new (rich media features), and probably also appeals to a more adult / Western audience (GTA and similar games) and PS2 owners.
Normally I'd have expected the DS to win, but the PSP is doing remarkably well. That people think it is otherwise is because a lot of people expected the PSP to wipe out the DS, because Playstation eventually beat Nintendo in the home. It took some time however, and the DS is a stronger device too. And there are some great innovative titles for the DS, which, yes, the PSP hasn't been able to match.
We'll see. I personally think the PSP has far more potential, but people were happy with the GBA for far, far longer than I could possibly imagine also, so I'm not going to make predictions based on that.