Thank you everyone for your input. to answer some of your questions here is a little more information:
We are working on something that will have a size similar to an iPhone so that it is small, portable and professional looking. As far as the gaming ergonomics, we are working on an accessory that you put it in that makes it become a controller. That way it is still nice and comfortable to play.
Touch screen, I am not sure yet. Although that would be amazing, I don't know if we can feasibly put that feature in at a price below 250. Unlike Sony, we won't be able to sell our console at a loss because we would have nothing to make up the difference.
Battery will be a rechargeable one, also will synch up to PCs via USB. There will be a SD card port so that storage memory is what you want make it.
I am not sure about the operating system yet, however I will ensure one thing: it will be fully and explicitly for your own customization and cater to homebrewers. There is nothing that bothers me more than the current commercial handhelds that you have to “crack” in order to do what you want.
To answer the questions about price vs. a DS or PSP… you can’t just consider the $130 and $199 prices. You need to also buy flash carts with a poor interface/complicated synch to PC or buying a game to downgrade and play what you want. So to address the price issue I would say you are paying for better hardware, convenience and unlimited possibilities.
So yes, it sounds sorta like a Zodiac or a GP2x, just upgraded and with more versatile functions in a nutshell.
I hope this clarifies things.
Jeremy