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The catch-22 with the PSP is while you have the power to playback top quality video, the question is do you have deep enough pockets to do it? With a 1gig Memory stick costing well over 200 dollars after taxes, you could have bought a DS, or nearly another PSP.

Because the PSP's storage medium is so expensive, the MOST the average person will do is watch a movie on UMD. This begs another question, why pay 20 bux for a movie you can only watch on your PSP? Wouldn't it be more worth your money to buy a real DVD to watch on your TV, and downscale it to your portable later?

So, which system is better for video playback?

The PSP, no questions asked.

Which system is better for playing back your own video?

The Nintendo DS.

Why the DS? Because the most important factor, the storage medium you'll be transporting these movies on, is CHEAP in comparison to a Sony Memorystick, and come in two flavors, CompactFlash and SecureDigital.