Just thought I'd compile a list of the best homebrew programs and games for the PSP. I'd link them all to downloads, but the programmers update the stuff so frequently that the links would be almost instantly outdated. Just go to http://pspupdates.com and go into the file section, then search by the name.
Essential Homebrew Programs:
1. irShell - The first complete alternative to the operating system (XMB) that comes on the PSP. Comes with a dozen different high-resolution backgrounds, an excellent file browser, built in music and video player, and is able to launch all kinds of homebrew programs and games as well as ISO loaders, from either the file browser or the homebrew icon view.
It also comes with several plugins (and room to add more) including a basic HTML viewer for looking at downloaded web pages, an image viewer for JPG/PNG, and the Bookr program for reading TXT and PDF files. It's also capable of playing MP3s stored on the memory card while running other games and programs at the same time. By far, the best all-in-one program for the PSP yet.
2. LuaPlayer - An excellent menu browsing/script loading system for the LUA script language, which is what most PSP games and homebrew are coded in. Instead of having twenty icons for twenty different Lua games, use this instead. Some games have to run independently because of the way they're written, but most can be run through this - making it much easier to find what you've got stored in your GAME folder on the regular PSP menu or through irShell.
3. PSPRadio - The original (and still the best) SHOUTCAST streaming program which logs on to Internet radio channels through WiFi connections. Now comes with a plugin for the popular Links2 browser.
4. PSP-PDA - While most of its functions are handled just as well (or better) by irShell, it's still useful to have it for its calculator and address book functions. Also has MP3, TXT, and JPG functions.
5. DAXZ ISO Loader - Loads game backups in .dax format, a compressed ISO that's much smaller than a regular ISO file, drastically reducing the amount of space your game ISOs take up on your memory stick. Program comes with a utility for compressing the ISOs you already have into DAX format. The program incorporates the code from RunUMD, MPH Game Loader, UMD Emulator, and others for a seamless loading system for ISOs "requiring" 1.0 to 2.5 firmware.
6. DevHook - The essential tool for loading games which require version 2.6 or higher - can now load games encrypted all the way up to the current version of 2.71!
7. PMP (Playstation Media Player) - Allows you to play a wide variety of AVI/MPEG, etc. video files, as well as stream them to your PSP from your hard drive.
8. TVSP - A program that streams television to your PSP through WiFi, and can be used anywhere you go. Requires that you have a TV Tuner card in your PC hooked up to cable.
9. PSPAppMan - A utility for use on your PC, which hides corrupted data icons and allows you to sort your games and apps to find them more easily.
10. PSPWeather - Retrieves weather forecasts through the WiFi connection.
Essentiall Homebrew Games:
1. Callisto - An extremely well-rendered side-scroller "asteroids" type of game where you destroy flying enemies, get better weapons, and dodge enemy fire and obstacles.
2. PSPChess - A very sharp looking chess game, with a fairly intelligent AI and good configuration options. Has 1 or 2 player modes.
3. Kill Everything That Moves - Like the title says. Two games in one, 1941 mode and a space mode. Either way, fly around and shoot increasingly difficult targets.
4. Droplets - A fairly addicting puzzle game, in which you try and clear the board with a domino reaction.
5. Vexed - A very challenging puzzle game using matching blocks.
6. DoomPSP - Use a shareware or full version Doom wad for hours of bloodshed on the go.
7. QuakePSP - Includes AdHoc multiplayer and Internet modes.
8. Heretic - A port of the FPS Heretic.
9. PSPool - A port of a PC billiards game. 1 or 2 player.
10. The Simpsons Battleship - A Simpsons-themed battleship game with 1 or 2 player modes.
11. Casino Addict - A collection of casino games including Blackjack, Poker, Roulette, and Red Dog. For some reason this one is not hosted on PSPUpdates or PSP-Hacks, so find it at their homepage:
12. PSPMillionaire - A homebrew "Who Wants to be a Millionaire?" game that comes with tons of preprogrammed questions and allows you to add more.
13. Tetris - The classic come back to haunt us all. There are a half dozen different Tetris games out there, which one is best is debatable.
Finally, there are countless thousands of games that you can play on your PSP through the use of emulators that load games from consoles such as SNES, NES, Sega Genesis, and Atari. There are a couple dozen systems which can be emulated on the PSP, including older PC systems such as the Commodore. A complete list can be found at PSPHacks:
Be sure to get a copy of SNESTYL and NesterJ (SNES/NES emulators) as they support two player modes over WiFi.