Great, we can quit with all the rumours! Well. Almost. Sony Ericsson President Miles Flint has confirmed that, yes, they're looking long and hard at bringing in a gaming phone. He pulls up shy of confirming one is actually in development, but does discuss that if/when one does come along, it may not carry the PlayStation brand name:

We need to make sure that it is a credible phone, and be sure we are justified in putting that identity on it.

Come on, can't be that hard! Put Vib-Ribbon on one of those Sony Walkman phones (custom soundtracks, you see) and we are all set.
Sony Ericsson eyes PlayStation brand [Financial Times]

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