1. Sony presents PSP: retailers tell publishers to go full on PSP.
2. Nintendo presents DS: retailers tell publishers to really go full on PSP.
3. Nintendo releases killer apps after killer apps: retailers tell publisher to go full on DS!
4. Sony US and Europe deny approvals of unique games, of teams without a publisher behind them, requier games to have features unecessary to the gameplay just to show the PSP is technically better than a DS and propose too expensive dev kits.
5. Approval and testing staff is moved from PSP to PS3 to make sure the next gen machine has the best launch possible.

How, after all that, do you expect killer apps SONY? You don't have them and you are not allowing others to make them.

1. Simplify the approval process.
2. Remove design requierements.
3. Allow teams without publishers to develop.
4. Reduce dev kit prices.
5. Start the store ONLINE already, on PSP! So teams can publish without retailers approval!

That would be a start.