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Sony not ditching physical game distribution.
Let's be honest in saying that the PSP Go didn't exactly capture the imagination of the public with it's release last year. A more pocket-friendly size may have lured many towards the device, however lack of a UMD drive and the inability to play one's already purchased back-catalogue of PSP games drove many away, not to mention game prices on the PS Store being similar to those of retail, only without the flexibility of price fluctuations and frequent sales.

So it comes as no surprise then that Sony isn't taking the digital distribution-only route for the newly announced PSP2 or "NGP". Instead, games will now be distributed on Flash Memory devices similar to that of the Memory Stick Duo or Nintendo [3]DS game cards. Unlike the DS and 3DS before it, however, it doesn't appear that there is an upper limit on the size of these storage solutions. The 3DS currently has a limit of 2GB.
Sony announces the PSP successor, the NGP. Earlier this morning, Sony announced it's next generation of portable gaming solutions, the "Next Generation Portable Entertainment System" or "NGP" as it's currently being called. Money's still on "PSP2" being it's official name, however.

The system comes with the often-requested dual analogue joysticks, which are now more flush and less "thumb-nub" as seen on the original PSP, a capacitive multi-touch OLED screen and similarly multi-touch back trackpad, rear and front facing cameras, but crucially, missing any physical media slot. Update: Sony confirms there will be physical media support.

The system is packing a quad-core CPU and a beast of a GPU. The power of the machine was demonstrated by none other than Metal Gear creator; Hideo Kojima, who demonstrated Metal Gear Solid 4 on-stage, however, was keen to stress that the game is merely a technology demo and no plans to bring MGS4 to the NGP are on the table.

No word on price or release window, expect that at E3 in June. Until then, take a look at some of the shots below and hold your hats as analysts predict how much the system will cost. My prediction? It wont come cheap.
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Added: 27/05/2011