I don't see the big advantage about losing the UMD. Yes, it takes up a bit of space but taking away the option of using it seems like cutting your nose off... No doubt there will be a plug in UMD drive soon.
It's a bit of a kick in the teeth for anyone who has recently bought a PSP-3000. Come to think of it, everyone who has a 3000 bought it recently because it has only just come out!
If sony are doing all of this to try and win % market share from Nintendo then what they need to do is stop throwing all this money at what is, in reality, a tiny upgrade for the end user. They need to move their efforts into getting some great games PSP games out. I have a PSP 2000 and a DS lite and I like both of them for different reasons. The PSPs main fault by far is the fact that there are so many 6/10 games for it and only small number of must have titles. Get some great games out and I would use the DS less and less. The DS for all it's limitations has loads of great pick up and play games. It's games that matter.