First of all, I think it's never too early for a company to be thinking about their next product. I'm willing to bet successors to the PS3, 360, and Wii are already in the works at their respective places of business.

Second, I'd be suprised if a PSP2 wasn't backwards compatible. The UMD might have failed as a movie medium but it's still got a decent storage size and I'd be willing to bet they could multi layer it or something in the future.

At the very least Sony could do what the DS has done, which is provide a second port for the older format.

Lastly, I *do* think there will be a PSP 2 at some point. Everyone is throwing around failure this and disappointment that, but in the end I figure the PSP was simply their initial entry into the market, much like the Xbox was a way for MS to get into the console business, and we'll certainly see a followup.