Wrote this for people who just got a PSP.
The PSP has the ability to play video games, watch videos, listen to music, upload and view photos, as well as Internet browsing functionality. Although the PSP can do all the above, its primarliy made to play PSP video games made aon a custom format for the PSP called Universal Media Discs. (UMD for short).
The PSP runs the Cross Media Bar (aka XMB) firmware. Firmware is the equivalent to the Operating System (OS) and BIOS (Basic Input / Output System). The Firmware of the PSP is physically located inside the PSP unit itself, usually on the motheboard. Just like Micosoft Windows OS, it is upgradable and replacable that allows you to tighen security and add new features to the system. Sony releases official updates every few months sometimes only upgrading security and at other times adding new features like the ability to turn pictures into wallpapers. All games require you to have certain firmware version before playing them. If you do not have the required firmware or above, you must upgrade. Most games come with the update on the UMD{see below). For example, if you want to play "Grand theft Auto: LCS" on your PSP, you must have firmware version 2.00 or above to play. If you don't, then you can't play that game. Some games require different versions than others depending on when the game was released.
To see what version your PSP is, Navigate to Settings on the XMB, then System Settings > System Infomation. You will see your PSP's MAC Address, System Software Version (aka Firmware), and name. To update manually, download updates from the PlayStation Site and copy the (eboot)file to PSP/Game/UPDATE folder and it shall update your PSP. Once installed (the update) you can delete it from your memory stick.
Your pictures, movies, music and save game files are all located in your memory stick. The PSP primarily uses Sony's own Memory Stick Pro Duo cards but Memoy Stick Pro also work. These cards also works only mostof Sony's digital products like PDA's and Sony Ericsson Phones. These small cards come different colours and sizes though the bigger Memory Stick size you have the better. You can also buy the cards from other companies like SanDisk at any consumer electonics store like BestBuy or Futureshop. The biggest sized card to date holds roughly 4GB of data. No games run off the Memory Stick unless it's Homebrew or official Game Demos released by Sony themselves.
Important: When you first obtain your memory stick you must format it using your PSP. To format it, please go to system settings and select format memory stick. Formatting will erase all data on your memory stick. Be aware that due to discrepancies in calculations used by memory and hard drive manufacturers, as well as formatting requirements, means that your actual, useable space will appear smaller than the listed size of the memory stick. This is normal.
Univesal Media Discs or UMD's for short, are custom media disics Sony has Developed for the PSP. They hold aproximatly 1.8GB of data. This is what you buy to play your games. You cannot burn or copy UMD discs as there is no known method to do this via regular hardware. To play a game, simply place the disc inside the PSP slot and scroll over to 'Game' on the XMB and press X. Thats it! UMD's are also capable of having movies and music on them. To play Music videos or watch movies, just scoll to 'Videos' on the XMB and press X. With Music, just scroll to 'Music' on the XMB and press X.
Dictionary.com define homebrew as 'a beverage made at home, usually alcoholic'. But in the case of technology, it means custom software and games coded by hobby programmers. Homebrew is the equivalent to freeware or open source programs and games on computers. Homebrew is not piracy but there is homebrew that has 'illegal' uses (Emulation and Roms for example).