Ultimately, whatever the iPad 2 can offer, the PSP is for 'proper' games that need controls which iPad 2 simple cannot offer, so its not an either or, question - more one of how many gamers still like playing proper games in the traditional style.
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A few things from the iPad 2 launch today, good to see it has HDMI-out which will hopefully nudge Sony to include that in the NGP specs. But I was really impressed by its claimed 10X graphics power increase over the iPad provided by its A5 dual-core processors.
Now that could put out some serious visual gloss, even if the machine is limited to the same resolution display as the the old model. 1024*768 (I think) . However, when the iPad 3 arrives with its Retina hi-res display, things could be different. And, although this is all rumour and conjecture for now, iPad 3 could be out in around six months time, the same period as NGP will be launching into.
Of course that Retina display will push the price of the iPad 3 up a little, making the NGP seem rather cheap in comparison. We'll see closer to the day, but without controls, iPad just can't play the kind of games that core gamers like, plain FACT! So, unless iPad comes with a magical control system, it has nothing to fear on that front.
There's a parallel piece about iPad 2 vs. 3DS here, which seems to assume the threat is bigger for Nintendo, what do you think?