Here's a bit of info if you decide to upgrade your PSP and have downloaded some PS1 titles from the PlayStation Store. If you try to play them from the memory card, the first time you play them, you'll get this error:
To use this content, you must activate the system.
Yeah, great information there on how to do that. After looking around the intarwebs for a bit, I finally found some information on how exactly to do this. So if you get stuck in the position I was, here's how to get around it:
On your PS3, go to Account Management under the Friends portion of the XMB
Go to Account Settings in the Account Management screen (your only other option is for transactions)
Go to Activate System
Connect your PSP to the PS3 with the USB cable
On your PSP, under Settings on the XMB, go to USB Connection
On the PS3, select PSP on the activation menu (your only other option is PS3)
Select Activate (your only option is Deactivate)
The PS3 will tell you that your PSP has been activated
Once that's done, you can exit out of Account Management on the PS3 and exit out of USB Mode on the PSP. You're now all set for playing PS1 titles on your PSP system. Lots of steps that Sony definitely should publish somewhere on their website.