Modder jube808 is on a mission to bring you wonders your PSP has never seen before, but should have in the first place, according to him. His Pspzproject aims to deliver touchscreen support, in addition to better battery life and a redesigned control pad. From these videos, you can see he's got a keyboard app that can be used either with a finger or a stylus. He wants to deploy touchscreen to homebrew gaming later on.
So is this another step in making a PSPhone, or is it turning into a DS? I say the next logical step in modding is to make the entire PSP into a Wiimote.
Pspzproject -- The Touchscreen Project for the PSP [pspzproject.dcemu.co.uk, thanks Wraggy]