I think they are both fun systems, just go for what games you like.
I think the DS is a lot of fun, but that touch pad isn't that strong. Luckily, you can close it to protect it.
As for the PSP, I agreed with you on the price part...until I actually played one. It is BEAUTIFUL. I'm serious, I'd buy one now if I had the money. I too was sceptical until I put my hands on it to play. The games look almost just like the PS2. The way the system is built...a sight to behold. But the PSP ain't for kids. It's shiny surface will pick up fingerprints and dirty hands easily.
I say, whichever system has the games you wanna play, get it. I think PSP games are about $39, I think. But you can also browse the internet with the PSP, watch UMD movies (if you got any), and a lot more stuff is coming. In Japan, you can download TV shows for free. They have a PSP TV station with anime and shows to download. But you will need a good memory card.
All in all, like I said before, games first. Both has good games, but I see more of a future with the PSP. Nintendo will more than likely come out with another handheld like always, soon. Since that is their claim to fame. PSP is gonna be around for a bit, since you can use it with PS3 and stuff. It's your buck^^.