Nintendo DS. just to be clear, I'm not considering the newer models (PSP Go and DSi) in this comparison, mostly because those are sins against all the is good and true in gaming (just kidding).
I own a DS lite and I'm considering buying a PSP 3000 soon. I actually own 2 PSP games, but that's just another (dumb) story. Thing is, the DS size is great; its games come in small game cards, its game library is extremely appealing to me; the battery gives me 12-17 hours of play; two screen, one of those with touch sensitivity creates opportunity for innovation; and it has backwards compatibility to the greatest portable system in my opinion, the Gameboy Advance.
PSP is a more versatile device with skype, music and video playback, internet browsing, etc; has better speakers and a huge and awesome screen; The graphics are better but not much; it's bulky, heavy and the UMD's also take a lot of space in a backpack; the game library is good but aren't many great titles you can't also find in the Playstation 2 or Nintendo DS.
Just a matter of preference, but I think the DS is slightly better.
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