This information is taken from PSP-SCENE.ORG

UPDATE2: PSP System Software version 2.0 Update

From July, 27th, 2005, the new system software update will start. This update will upgrade your system version to 2.0. Changelog:

Main function updated in system software version 2.0
- Network
Internet browser added
* Macromedia Flash is not supported. A part of the web pages might not be displayed correctly
* The startup of the internet browser can be limited.

- Video
Jump function added (UMD Video & UMD Music)
A-B repeat function added (UMD Video & UMD Music & videos stored in Memory sticks)
"4:3 mode" added to Video mode (videos stored in Memory sticks)
Sound mute function added (videos stored in Memory sticks)
MP4 (AVC) format playback support added (videos stored in Memory sticks)

Can accept music tracks in Atract3 Plus format from "Sonicstage" under version 3.2 (now for pre-order)
MP4 (AAC) & Wave (Linear PCM) format playback support added (music stored in Memory sticks)

- Photo
Wallpaper function added
Image receiving function added
TIFF, GIF, PNG, BMP format supported

- Settings
"Korean language" added to "system settings" -> "System language"
"Character set" added to "system settings"
"Theme settings" added
"Internet browser startup limit" added to "Security settings"
"WPA-PSK (TKIP)" added to security method in "Network settings"
Keyboard now support web input.
* All the setting before the upgrade will be preserved.

UPDATE: Firmware 2.0 has been confirmed. It will be releasing on July, 27th.

Sony also confirmed and showcased the official Sony PSP Internet Browser Function. This official web browser supports HTML v4.01, however it does not have support for Flash.

It's very likely that this browser will come with a brand new major firmware update (like 2.0). Rumor has it the new firmware version will be released July, 27th. So let's choose: all the sweet homebrews / games / emulators / tools, or a web browser? Maybe it's time to buy another PSP... how about that sexy white one?

Sony also announced a direct video supply service called "Portable TV" which is starting on July 27th. Users can download TV content in H.264 format, and play it on the PSP! It is said that H.264 video playback will be supported after this v2.0 update. It is unknown if this service is free or not, or how it would be billed.