Kotaku published more details about a smaller Sony PSP that Sony is apparently working on. The gaming site says to have obtained the details from sources close to Sony.

The new smaller PSP would have the same hardware inside, but have a smaller form factor and a new LED LCD screen. The battery life is supposed to be 4 times that of the original PSP.
Also 8GB of onboard memory are part of the new "PSP lite".
Sony is supposedly revealing the new PSP at the E3 Media & Business Summit in July.
Kotaku already revived the Small Sony PSP rumor in early May.