Since its been officialy denied, it must be true. Possibly not with Erricson however, trying to leave your partner out of the loop like Nintendo did with you (with the Snes CD) huh Mr Sony?

Isn't it more likely that they're planning to put some kind of wireless data capability in a PSP for on-line gaming?

Obviously, if it's UMTS/HSDPA, then it will nominally be a phone - but in practice, it's about as much a phone as a Dell laptop is (also comes with integrated HSDPA data card).

Is it web 2.0 enabled as thats gotta be worth paying for, whatever it is, oh and is it available in orange?

I would buy it. It makes a lot of sense as a device, now that Remote Play has been added to the PSP/ PS3, having 3G to be able to use it (almost) anywhere would be a major plus, along with the web browser and online gaming. All they need to do is sort out a decent text entry method, maybe a touchscreen or small keyboard. A far more attractive proposition than a bloody Iphone, that's for damn sure.