UMD will stick around, however
Joystiq had a chance to speak with Sony Computer Entertainment's senior product manager for the PlayStation Portable, John Koller. Naturally, their interview revolved around the PSP, how successful the company feels the console has been, and where they hope to take it.
Despite the flak UMD has taken recently, there are no plans to ditch support for the format on the PSP. However, does concede a major step for the PSP will lie in direct content downloads. PS1 game downloads in particular are still slated for this Fall, but no pricing determined for US and Japan at this moment.
Despite the PSP's touted multi-functionality, the company will continue to put emphasis on the "mature" gamer market with the console. Sony intends to keep UMD game pricing around $39.99US, but as expected third party publishers will ultimately decide the prices for their own titles. However, Sony does see the merit in pushing "shorter" games aimed at a wider demographic in the vein of Nintendo's DS lineup.
Koller was not able to confirm any of the rumors concerning a possible next-gen PSP.