1) The games are region free (unless specifically locked-out by the publisher -- virtually nonexistant, though). Movie and Music UMD's are region-locked.

2) To get the most out of the whole multimedia experience, a 512MB Duo is bare minimum. 1GB Duo is recommended.

3) Depends on how you want to. If you're a clean-freak and care about hairline scratches, it'll need a lot of care. If you're fine with some scratches, not much care is needed. Fingerprints are very visible, so that requires attention (unless, again, you don't care). It's safe to say that a drop every now and then won't do any harm. Since launch, I've dropped my PSP 7 times from varying distances (2-8ft). Still works great.

Enjoy your purchase if you do get a PSP this holiday season. I'd highly advise importing a few games...