The PS Vita will play PSP games too. Folks who have physical UMD discs can get a UMD Passport which will enable folks to buy the download version for a heavily discounted price. Save data can be also transferred via the PS3 or computer.
I know that many folks try to avoid the first generation models due to bugs and flaws - I remember that the PSP originally came with the ability to eject discs unintentionally ^^; I got the first gen PS3 and never had problems with it though.
Was surprised to see that Amazon are still taking orders for the Vita and will ship this weekend.