Of course publishers will create games on whatever platform can generate an acceptable profit for them, and yes, for home consoles often reward has been greatest on the HD formats (unless of course you happen to hit the jackpot on the Wii, something thats doable if you create the right content).
With handhelds I think the lines are a lot more blurred than people think. Day to day I have room for one device, and that device has to be a phone. So for me that's an iPhone as my main device. It does not matter in the slightest how much I like the 3D of the 3DS or the power of the PSP2. If they don't have a phone, they're not taking over my pocket.
The way many (most?) people play handhelds is in pretty short bursts, no more than 30 minutes at a time. Just the right setting for the cheaper, and often decent quality now, iPhone games. PSP2 just doesn't fit in with this more casual end of the market, and this just so happens to be where the bulk of the people and money is situated.
My only real thought is that this is too much of a games console rather than an all-in-one device. I know that's the point of it but the market has moved on from where we were 5 years ago. Yearly iterations of smartphones/tablets will at some point surpass the standards set by this device anyway. Right now I don't see this being a huge success whatsoever.
Just to correct one point, the iPhone market is very very predictable.