Which will be better?
I think PSP is going to blow Nintendo out of the water with the new system and end their portable gaming streak. I really couldn't care less about a touch screen display and it doesn't even have a joystick, just a flat d-pad. That doesn't sound like it would work well with 3D games.
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Actually they both will have wi-fi and i pretty sure they'll have online capability. Flash drives are more compact than hard drives.