Sony's PSP successor, codenamed Next Generation Portable (NGP), will have backwards compatibility with downloadable PSP games. All PSP games are run via a software emulator that will let you turn upscaling on or off to suit your preference and will be able to take advantage of the NGP's dual analog sticks. In fact, Eurogamer says it has actually seen Resistance: Retribution demonstrated on the handheld.
As for the official name of the NGP, one possibility is the PS Vita. Users spotted wording and details buried in the HTML source code for Sony's official E3 website that indicate PS Vita may be the handheld's final name. This corroborates with leaked information, which included alleged marketing materials and anonymous sources, according to Destructoid. We'll likely find out next week at E3 whether this was accidentally or purposefully revealed, and if Sony actually ended up deciding on a different name.
Sony is promising that the NGP will have give a PS3-level experience with a quad-core ARM Cortex-A9 processor and a multi-core PowerVR SGX543MP4 graphics chip four times faster than the PSP's. The device will come with a 5-inch OLED screen, two micro-analog sticks to simulate the Dual Shock experience, front and rear facing cameras, and two-finger multi-touch pad on the back of the machine that might open the door for new ideas in game control. A Sixaxis equivalent with a gyroscope and accelerometer is also available to let players control games by moving and tilting the system itself.
In terms of connectivity you can expect built-in 3G in addition to Wi-Fi and Bluetooth 2.1+EDR -- though it's unclear if users will need a separate for-pay service to use the 3G options. GPS is onboard as well, and a new app dubbed Near will let users see what other gamers nearby are currently playing and add them as friends. The NGP doesn't yet have pricing or availability details, besides "end of the year 2011" in Japan.
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