A lot of people like the modified PSP because of the homebrew emulators out there, allowing your old favote NES, SNES, Sega Genesis, and a while slew of other platforms to be played portably on the PSP on the go. Its sort of like what I thought the Nintendo Gameboy was going to be when I was a little kid. Well, the homebrew scene has known this since December of '06, but PSOne games can be played on the PSP, a capability not provided by the awesome and dedicated homebrew hackers out there, but by Sony themselves. Seems this was done in order to bolster cooperation and sales between the PS3 and the PSP. Homebrew guys just figured out the nitty gritty in getting this to work with all PSOne games, not just the ones provided by the PS3.
Now, I spent the better part of the night trying to figure out how to copy my PSOne games in a format that could be converted and played real easily. With the 3.X OE firmwares is a utility called Popstation that allows for the conversion of ISO's to a PSP friendly playable format. Of course, the documentation isn't very well done, and I just about pulled my hair out. The homebrew scene provides dozens of frontends, none of which really did what I wanted. However, thanks to the gaming news site QJ.Net , I was clued in to a neat little utility called Autopopstation. Basically, it is a collection of tools for creating PSP capable games. There is ISO Product, a tool that creates ISO images of PSOne games using the excellent Petes CD-R plugins (which incidently are the same plug ins used in PS emulators such as ePSXe), and the Autostation4.bat file, which is a batch file that automates the entire task of naming images, getting the game identifier tags, and compressing the games, and creating the PSP images. Just copy the completed images over to the PSP/Games folder and your set.