For portable movies I would definately get a PSP if it and an iPOD were my only choices. The screen is larger. 2.5" does not make for a great viewing experience. Same with these new cellphones that offer video on them... the screens are too small for anything practical.
The iPod screen may be good for quick picture viewing but it is mainly a music player. The other features are really just gimmicks to get people to spend more money. In my opinion, the PSP is a more all around device which fits multiple needs.
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