Rumor has it that a modchip called "Undiluted Platinum" is coming very soon for the PSP. What can it do? Boot custom firmware and load unprotected/homebrew code. That means running games from your memory stick.
A hardware solution would be more sturdy than the hacks people have been using so far to get the PSP to run custom code. However, if Sony can detect if the chip is installed, they can brick your PSP until you take it out, or somehow by pass that code. It never ends.
First PSP Modchip Announced - Undiluted Platinum! [DCemu]