Well, you're right, from a hardware perspective it's not terribly innovative, but that's only if you look at the innovation from a hardware perspective. Hardware is but one small aspect of a system.

Consider the reach, experience, and relationships that Sony has with developers having released extremely popular gaming systems as part of the equation when comparing the modern smartphone to a PSPhone. Consider the experience they have marketing and the established distribution channels. Lastly, consider the power of the Playstation brand, as well unmistakable relationship with gaming. These are entirely business areas of differentiation and are indeed significant.

One could argue that a PSP is little more than an internet tablet with a closed, static UI and gamepad attached. But the difference in positioning and software guarantee that it will be used very, very differently than an internet tablet.

So I would respectfully say Gaming Smartphone != PSPhone.