We checked out a working demo version of Skype on the PSP at Sony's booth and are pleased to report that audio quality was pretty decent -- certainly comparable to what we experience when using Skype either on a PC or on the receiving end of one. The only caveat is a bit of lag time in the audio transmission, less than a second but enough to be noticeable. The interface is super simple -- just select the Skype icon and you can see your buddy list of who's online; select someone to ring them up. At the demo station the headset in use was just a regular PSP headset jury-rigged up to the video out jack via the remote control cable -- not something we'll see in production. Since third-party manufacturers will be free to make their own PSP Skype headsets, there should sooner or later be some range of options available for headsets to use according to taste.

Underpowered projector, meet iPod dock