The PS2 is still going pretty strong in tems of games. But buying a PSP "just for music and maybe some games"? You should chose music or music and more-than-just-a-few games. Having a big, heavy MP3 player that costs $200 and will play one or two games isn't worth it. You could get another MP3 player with a lot more memory for a lot cheaper. And, you can actually move around with it. I have a PSP. It's impossible to run, or dance, or even carry it around school.

A 1gb MP3 player will cost you $20. You'd be saving $180 and you wont' have to lug anything around. Add that to the $130 you were planning on spending on the PS2 and you have... $310, easily enough for a used PS3. Maybe even a new one, I haven't checked the prices in while.

That's my suggestion.