I've seen enough retail evidence to suggest that the hacking and pirating of their portable is now mainstream; it's more than just Internet flunkies hacking the system. That's why their hardware sales are great, but their software sales suck. Problem is, mainstream folks actualy pay dirty pirates (like demi!) to hack the system for them.
This is so widespread that Sony is going to have to do what Apple did with iTunes - offer a competing, legal service that is more convenient at a very affordable price.
Why doesn't Sony just hire all the folks who hacked the PSP and get them to make some kind of pay-for downloadable firmware that enables purchases of old PSOne games for like $1.99 a pop?
They're missing the boat to make SOME money with this handheld instead of absolutely none.