Supposedly, via Eurogamer.es, PSP2 is in development right now and it is more powerful than the original Xbox and uses an upgraded version of the iPhone’s graphic chip. Don’t get excited because this is just a rumor. All I have to say about it though is that if it is true, then they better come up with a much better control layout. Maybe, they will even go for the HD approach like HHG talked about in one of his previous shows. Regardless, I will believe it when I see it and it will most likely be at next year’s E3 (or TGS 09′, but I highly doubt it).

Source (translated)