Sony PSP Android Phone?

Engadget reports that Sony is working on a device that is a cross between a PSP and an Android phone. What? Yeah. This device is rumored to have a hi-res 3.7-inch or larger screen, a slider with game controls instead of a physical QWERTY, have a 1Ghz Snapdragon CPU (bummer), and run Android 3.0. There might be a special section of the Android gaming for this device, also. What suprises me is that the Snapdragon is not very good at handling 3D graphics, so maybe there is more to this story. This is a rumor after all. I wouldn't be shocked if this phone had a different processor or a separate GPU to make gaming a much better experience.