PSP has not been a failure. Things were bad on the software side in NA, and hardware wise it hasn't been great in NA the last two years, but it is thriving in Japan. It sells in great numbers and there is even a shortage becuase of the high demand. It was the bestselling gaming hardware last year (JP), and sales have been good so far. Sony has every reason to be happy with the machine, considering it was their first attempt on the handheld market. Despite the piracy, it survived.
There are also some very interesting games coming out that will push even more hardware:
Dissidia 2: Final Fantasy
Final Fantasy: Type-0
Valkyria Chronicles 3
And a few more games.