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Kotaku
Looks like the latest versions of the PSP's firmware did more than just rapidly expose and then defend the handheld from hacking attempts and unlock the full potential of the systems 333 MHz processor. Code hacking enthusiasts have broken open the v3.5 and v3.51 firmware to discover a file named np9660.prx, which is an ISO loader that could possibly be used to play PSP titles off of a memory stick without using a UMD.
Looks like Sony is getting closer to allowing PSP and PS1 games to be downloaded directly to the handheld, a feature, in my opinion, that would at least double the value of the system. Between downloadable PS3 games and the PSP Sony has found itself with the online content delivery ball and by gum they are running with it. Godspeed, little multinational corporation!
ISO loader in PSP firmware [Eurogamer]
