MCV UK confirmed earlier rumors that Sony will announce the PSP2 officially on January 27th, and revealed that the Japanese console maker has told the device's licensees that it is "as powerful as the Playstation 3."
Keep in mind that the PS3 has to deliver graphics at 1080p and 720p resolutions while the PSP2 is not expected to sport a screen with resolution more than 480p. It is also worth noting that there is no mention yet of the device's battery life.
Sony has consulted publishers and decided to release the PSP2 by the end of the year - sometime around October 2011. The company has instructed publishers to create richer, more in-depth content for the new handheld in order to differentiate itself from the iPhone and Android devices.
The new PSP will feature an HD screen with twin-stick controls in the familiar 'brick' form factor and it is unrelated to the Sony-Ericsson PSP Phone which is expected to be announced in February and will run Android OS and focus on smaller games.