IGN reports that according to credible sources Sony is working on a PSP successor complete with a multi touch widescreen interface similar to the iPhone. This would be used for menu navigation and gameplay.
That's all IGN has to say on the PSP 2, with SCEA unable to comment on "rumour and speculation".
Late last year it was rumoured that Imagination Technologies had secured a major license agreement to supply Sony with a graphics processor the PSP 2. Earlier this year a user survey on possible PSP 2 features was also uncovered.
While purely a wish list of features, VideoGamer.com has put together a list of must have PSP 2 features that would make us very happy.