PSP will soon let you use voice-over-IP services, with a future upgrade adding voice chat support that'll let users cyber each other for free using the popular internet chat tool.
Sony is planning to launch 'RSS Video' for PSP too, letting you watch online video streams through the PSP browser. E3 will feature download pods where PSP owners can test this out by streaming a video of this very conference.
Finally, it also confirmed the much-rumoured PSP camera peripheral along with a GPS system, with Sony clearly copying the massively successful Gizmondo console's lead there.
PSP will not be seeing a redesign - these enhancements will be done via hardware and software upgrades. There is no "PSP2".
As for games to help counter the massive Nintendo DS popularity... Killzone Liberation was about the best of the bunch on show, bolstered by the announcement of a new budget range - for America at least - consisting of re-releases of Ape Escape, ATV Off-road Fury, Hot Shots Golf, Twisted Metal and Wipeout Pure.
Almost certainly in rubbish-looking boxes stamped "Greatest Hits".