I wasn't talking about the PSP 2 either. The part I've bolded could fit in here: "What I did state is Nintendo would be crazy to stop supporting the vast majority of their NES owners," except replace "vast majority" with "every single one." Functionally, there's no difference between dropping customers one way or another way; don't get lost in the details. As we know, the Super NES went on to be a smashing success despite customers needing to buy everything new and not even being able to use the same video cable.
The fact that the PSP Go is download-only doesn't make it any less convenient than switching to a new system without support for UMDs, which you say you weren't expecting. The only argument here is just sour grapes (which I sympathize with, of course) that Sony may is releasing a "new" system which only changes the content model from discs to download. As many have stated, there's still the regular PSP. If anything, your chances of compatibility looking forwards are much improved with the download model.
I think the Go may well mark the point where Sony makes an effort to ditch read-only media and going forward to focusing on content, hardware, and high-end storage, which all make much more sense in today's landscape. It will inconvenience some to buy games online, but that also frees up ratings restrictions, finally ties the other piece of the puzzle for people who already have been wanting to get online with their media players, and doesn't make it more inconvenient to game on the move (as all you need to do is load the game from the download service while at home).
The elephant in the room in this discussion: Does anybody here seriously think Sony would be wise to invent a "UMD to digital" reader program for the PSP, or hardware to do the same? On top of that, such a device would essentially be a piracy machine; game developers and publishers would force it to be killed. There's no way out of that situation without CD keys (which, for better or worse, PC has been using for years, which let Valve migrate CD-key games to their Steam service in 2003). Physical media is dead, vive le Roi.
No, that is not the right way of looking at it. Restricting game creation only to companies funded by multiple millions of dollars is more important than starting to bring down game costs and moving to distribution systems that make sense in today's world, right?
Also, there ARE quality games in the Apps Store; dismissing it all as junk is looking at it through blinders and blackout. The old "Apple = overpriced junk" and "all online game systems = full of trash" generalizations do not apply to the ideas as a whole. In fact, Sony's system may well end up more like Steam, a bit less democratic seeming than the Apps Store, as Steam focuses more on Big Production games and mods for games using their engines.