I wasn't sure where I should have posted this. If it's in the wrong place, please move it.
A user at GameFaq's found this error. I think it could lead to some hacking possibilities. Not sure. Here is what he found:
It may be nothing for the hacking community, but even so, keep this in mind when playing Liberty City Stories.A few people (including me) have had all their internal memory erased - That means out system setup, wallpaper, and Internet connection : Gone.
This seems to be caused by going "Home" before the game actually loads. This means until you're actually playing the game, DO NOT GO HOME (that may sound weird )
DO NOT HIT HOME BEFORE THE GAME LOADS
If you do:
-Your game will have a blue/grey (Cant remember exactly) screen with a bunch of coding in Japanese or something which forces you to turn your psp off
-It will take 20 seconds to turn your psp back on
-When you start it up again, the background will be grey (because you havnt set the month), and you have to go through the setup again.
NOTE: You do NOT lose your memory on your memory stick!