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I've got a PSP and its the mutts nuts...
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You can use it as an MP3 player/MP4 Player and you can download games to it as well (but you have to get its software cracked first).
I can use mine to browse the web wirelesly (how DO you spell that!!?) too.
Whereas the DS is just a games machine.
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The DS Lite has wi-fi for multi player gaming and you can also access the internet through the DS Browser so there's no difference on that front.
imo the DS lite looks better and there is a fantastic game range, Worldwide sales also prove its the most popular hand held games console currently on the market.