I have a DS Lite and an all-digital distribution gadget doesn't interest me in the least. Also, I've borrowed a PSP from a friend for a long period of time to play a few select titles, and found the battery life, portability, and screen size to be very adequate.
I also see an all-digital distribution model as anti-consumer when no price decreases on the software accompanies the removal of resellable, physical merchandise.
Edit: SD cards are dirt cheap and have sufficient DRM built in to eliminate most piracy. If Sony really wanted my money, I'd be willing to pay for a PSP Go with a SD slot and games that came on SD cards or some sort of flash based memory chip for the same price as UMD format games. The SD cards could be resold, so the 2nd hand market would still be there, and I would get to have a smaller form factor PSP. The price would have to come down to the PSP-3000 price levels as well, since I'm saving them money on UMD drives. Heck, if they really wanted the full $250 asking price for a PSP Go, I'd probably be willing to pay for it if they included the flash memory based carts, a system to transfer the carts to my PSP Go's internal memory (through Online authorization most likely), and that same system would let me deauthorize the game from my PSP Go so that I could resell it later if I wished. Think of it as iTunes with a physical way to transfer ownership of the digital rights to my content.