The only way to stream it would be through USB, wifi is way too slow. The PSP only has 11mbps B networking, which is about 1.375 MBps. That's way too slow to stream a game from, USB 2.0 allows for 50 MBps, which is a bit more reasonable.
Personally, I'd rather try to run them off the memory card, it would be a much simpler setup. The only issue is that large memory cards are expensive, usually no less than $100. And there are people paying $250+ for 2GB memory stick duos, which is more than the PSP itself :|