Ipod is a DAP with video playback.
PSP is a Game handheld with Video/music playback

PSP has a 16:9 Widescreen
PSP's Widescreen consists 16.7 million colors
PSP >2.0 firmware can play emulators , isos , VNC servers etc
PSPs battery lasts 4 hours for Gaming 5 hours for Video and 13hours for music

Ipod's screen is 2"
Ipod's cant play emulators or any games because its a Digital audio player
Ipods battery lasts longer when used only for playing music otherwise it only lasts 2 hours for videos

so really if you listen to music only and want to carry your whole music collection get a DAP (Digital audio player) but not an ipod. Ipods suck for whats its worth.

If you like the idea of playing games on the go and you only carry some albums and videos with you then get the PSP.