According to Sony’s PSP University at the San Deigo Comic Con, the PSP will work as a remote for the PS3. It will have additional functionality and interactivity with Sony’s next-gen PlayStation 3, but exact details are still to be revealed.
Other info and news from Sony include:

• PSP’s firmware update next Thursday will offer RSS Video feed support for its web browser (it already supports RSS audio feed)
• Thursday’s firmware update will also have a demo of World Tour Soccer 2
• There are no plans to improve text entry on the PSP and no plans for a first-party keyboard
• Sony is in discussion with wireless providers to create more internet hotspots for your PSP to connect easily to the web
• Video out is something they know is important and are working on getting done