Well, on Day 1 of E3 I inspected this unit up close and personal.
The little bump directly below the digital pad is an analog thumb "stick". It slides a bit differently than a stick and feels a little awkward due to how low it is positioned on the unit, but it is still quite useable. None of the demos at E3 used it, so I can't quite say how it feels in actual play, but the overall unit looks and sounds (with headphones) amazing.
The 16x9 screen will initially strike you as being HUGE when you hold it...when others hold it, all you see is a glorious widescreen display of bright and bold color sitting between their hands. Playing games and movies on this device will be a total treat.
The footage of GT4 Mobile they showed running on a PSP (albeit canned footage) looked exactly like the PS2 counterpart...and Sony is making a bold claim right on the bottom of the GT4 Mobile box:
"Gran Turismo 4 Mobile, coming from the Gran Turismo series, is the PSP version of the real driving simulator. Its product quality is not at all inferior to its PS2 counterpart, and is compatible to competition over wireless LAN, a unique feature to the PSP."
I've confirmed that PSP will support competition over wireless LAN...both over the Internet and peer-to-peer!
So there you have it! I would have liked to see actual playable games, but the interactive demos were impressive nonetheless...very remniscent of the first demos we saw on PS2.
You could feel it in the air...PSP is going to be a tremendous success for Sony. Everyone I spoke to said they'd be first in line to own one regardless of price (I too can't wait)!