Most the people that have PSP's at my school use them as a media player. I don't think they're totally rediculous to use as a MP3 player; they're definitely not the most economical players, but they do work pretty well.
Personally, I don't think this is a good idea. I don't think it should automatically download music, that would get annoying. I think it would be neat if you had the ability to browse through the songs/artists that other people in the surrounding area had, but then again, that would kind of defeat the purpose of this technology. Plus, transfering files wirelessly takes a while. I'm not sure what wireless protocol PSP's use, but I kind of doubt it would take less than a minute to transfer an average song.
My brother has a PSP. It's a pretty neat tool I must admit. My dad wants one now.
The PSPs use wireless B (iirc) (we tried to have it connect to my dad's wireless router (which was dual B/G) and it was a no go) and rely on connecting to a central router to do anything wirelessely. Implementing a wireless network like this would probably be difficult, although the PSP does have ad-hoc.
I think the automatic downloading should be optional, and you should be able to browse other user's playlists if you want. However, it stated that it would automatically download music based on your tastes (much like
last.fm's recommendations, just a little more realistic).
The only problem with this is that last.fm recommends terrible bands that I don't like. If this thing were to succeeed, it'd have to have a massive database that actually classified genres and subgenres with the correct genre/subgenre. I don't think Avenged Sevenfold and System of a Down are in any way, shape, or form related to Possessed/Engorged/Exodus. =P
All in all, you could form tiny little networks and transfer as much or as little as you want, and the RIAA could never find out about it unless they were near you and somehow managed to sniff the traffic! I think it'll be one hell of a burden on their behalf.
