It seems like every few months we hear a new Playstation Portable 2 rumor, and every time, the machine sounds more incredible. At the rate we're going, by the time the new hardware arrives it will be delivered via flying unicorn.
Today the rumor comes from UK based PocketGamer. They're sticking with the "no more UMD drive" idea (software will be delivered digitally or via memory stick), but the device they describe has a large touch screen (similar to the iPhone) that slides away from the body of the device to reveal 'conventional' video game controls, including two analog 'nubs.'
Basically this sounds like the holy grail of PSP hardware. We gamers have long lamented Sony's decision to include only one analog 'nub' on the PSP (and it'd be wonderful if it was more of an analog stick than a nub) and with every new iteration we hope for a second, but thus far no joy there. Adding a touch screen would help take on not only the iPhone but, to a certain extent, the Nintendo DS/DSi (which also has a touch screen). The only thing the rumor misses is an accelerometer; then we'd be able to play Rolando and Loco Roco on the same device.
PocketGamer claims all will be revealed at this year's Electronic Entertainment Expo in early June. That much makes sense, as iterative redesigns of the PSP have appeared at the last two E3 shows, but both have been very conservative upgrades.