Sony has finally revealed how PS1 games will be able to reach the PSP's memory stick. To cut a long story short, it gets its games directly from the PS3. Sony has kept the system relatively in-house, you simply login to the Playstation store with your PS3 and browse, download and ultimately enjoy later on the PSP.
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The answer to that is surprisingly easy: The PSP gets its games from PS3. Instead of building a network specifically for PSP, or trying to connect PSP up to Sony Corporation's Connect service, Sony Computer Entertainment has simplified the process by working inside the PlayStation family. Log onto the PlayStation Store with your PS3, find your games, buy them, download them, and enjoy them on your PSP. It is possible that the PlayStation Store will also be integrated into the PSP in a future PSP firmware update (technically, the store looks to simply be a heavily modified and closed-network website), but for now, the console is the key to digital distribution.
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News Source:
IGN