try this by hungry horace worked for me.
How to run DGens 1.3 on 2.01+ Firmware
Right.... something i kinda managed to do by accident, but its working ok now so i thought i'd stick this up...
(only tested on 2.5 firmware)
1) (if you havent already) Download and install Fanjita's eLoader
2) Create a Folder on the memstick /PSP/GAME/DGEN0.7/ and copy the 0.7 version of dgen into it.
3) Copy the folders from the dgen1.3 zip into /PSP/GAME/
put your roms (still zipped) anywhere you like
4) Boot GTA and run the eLoader, both versions should be available
http://www.djcresswell.com/psp/eloader.jpg
5) Run 0.7, there should be nothing to do here, so quit back to the eLoader with L-R-Start
http://www.djcresswell.com/psp/07.jpg
6) Run 1.3, load your roms and start playing!
http://www.djcresswell.com/psp/13.jpg
http://www.djcresswell.com/amigashots/sega.jpg
--- some (minor) problems ---
The "input" page on 1.3 tends to freeze up and crash the PSP sometimes... avoid using it. In order to safely change your controller configs (for example, enabling the analogue stick) do the neccessary config updates on 0.7 and then copy the .CFG file from its folder into the 1.3 folder.
If the game running on 1.3 refuses to go back to the menu (L) use the L-R-Start method to go back to the eLoader and load 1.3 again.
have fun!! I'm *loving* sensible soccer!
also make sure that all the files are transferred properly via usb. i found that the light on the left hand side of the psp flashes when transferring but also it flashes stops then after a few seconds it flashes again. only after the second flashing have i found files to be transferred properly.
i was coming out of the usb connection after the first set of flashing but since i waited i haven't had a single problem since. applies to all fiels transfered via psp usb screen.
just a note.
good luck
by the way i am on the final boss of phanstay star 4 at the moment.