I was in this situation, in the end I picked a PSP.
I only have GTA right now but I'm loving it! Also finding it decent for movies on the go, screen is top notch imo.
I agree with what the above are saying in the way that you should think if gaming on the move is a big thing for you. For me I am on the bus a lot and due to our public transport system being worse than third world standards it can sometimes take up to 3 hours for my 30 mile journey... For this, the PSP is a life saver!
Battery life seems to be around 5 and a half to 6 hours for me, not sure what its like with wireless enabled as I have only used the feature once.
As for graphics, it just looks like the PS2 to me, maybe a bit worse. Still good though!
Really wanting GT4 to come out!!