Ever since Sony Ericsson's Rikko Sakaguchi went on record saying a PlayStation Phone (also abbreviated PSP) was a possibility, the internet has been wild with speculation. Some fans have taken liberty to design their own, and some Chinese bootleg companies have also taken fancy at the idea. According to Spanish-language site Clipset, their "insider" reports that the next line of phones from Sony Ericsson will feature the Emmy Award-winning XMB, the same navigation system used by PSP, PS3 and other high-end Sony electronics.
Theoretically, gaming could expand to the phones, creating a truly synergetic device. Because there's no verifiable source, take this rumor with a large grain of salt. However, if this does come to fruition, let's hope it's better than this. And this.