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In a presentation broadcast live from QuakeCon, Carmack revealed that the Quake III source engine would be available from their FTP some time this week. He went on to say how he wishes to stimulate “creativity in the development environment,” but added that great source code will not make a great game. In the same presentation Carmack also discussed the power of the PSP saying how he felt games developed on the Quake III engine could run on Sony’s handheld.
Quake III ran very nicely on the SEGA Dreamcast and also controlled surprisingly well with only the one analogue stick, so I would imagine the PSP would make a nice platform for some first-person shooters running on the Quake III engine.