You're right, I'd cancel if I were you. Sucks for OP but I don't sympathize with them, they made so many stupid mistakes and disregarded good suggestions from the pre-orderers, they sort of brought it onto themselves.

I'm pretty certain the new SDK is the PSP2 platform and this is a part of that.
Sony will give the PSPhone access to the Android Market and its own PSN (PlayStation Network).
From there the PSPhone can download:
Android Apps and Games
all of the current games (games that were converted from UMD into a digital download)
PSP Go games (new games available only on the PSP Go)
and new games built for the PSP2 (when the PSP2 is released).

I think Sony will go Apple's route and release the PSPhone first then the PSP2 comparable to the iPhone and the iTouch.
With the PSPhone, Sony and Sony Ericson will make some (a lot) of profit, then they will make the PSP2 available. The PSP2 will likely have less features/connectivity (ie download games via Wifi/PC connection) but will retail cheaper than the PSPhone.
I'm guessing it might be $400 for PSP2 compared to a $1500 phone plan. This approach makes a lot of sense.

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My thought's on the PSPhone hardware:

Pretty great but I wished they'd make these tweeks:
(in order of most-to-least important)

1) removable battery (geez that's common sense)
2) HDMI out (without one, I won't buy)
3) Dual-joysticks (not a multitouchpad!!)
4) Tilting action like the N97 (better finger reach for the shoulder buttons)
5) 4 fullsized shoulder buttons (not 2 and volume rocker)
6) 1GB of RAM to remove the bottleneck of 3D games (proof = Galaxy S)

What are you're thoughts??