Rumor: PSP2 powered by Imagination Technology 'Hydra' chip
Without getting into too many technical specifics, the chip — codenamed "Hydra" — will allow for 133 million polygons per second and a fillrate of 4Gpixels per second, with higher potential chip speeds obviously allowing for even more graphical power. Digital Foundry suggests this is a "ballpark match for the original Xbox." Allegedly, the chip will act as both a GPU and CPU simultaneously, increasing power efficiency and helping in other areas of programming for the device.
This is simply a rumor, for now, but if true we probably won't be hearing about the PSP2 until 2010 at the latest. It wouldn't make much sense to release an entirely new handheld just as the PSP looks like it's about to take off again. Unless it has backwards compatibility, that is. Then again, we know how that worked out last time.
[Via GamesIndustry.biz]