I've owned a GP2X handheld for a couple of years now, for those that don't know it its a linux based device that runs ports and emulations of older systems, as well as playing movies and music.
The Pandora is a new handheld that is in the later stages of development, it's design has been largly decided by the dev comunity built around the GP2X and GP32, it has a lot more grunt than the GP2X and will be able to emulate a PS1 at full speed and run games like Quake 3, all on a device about the same size as a nintendo DS. This should have tons of potential for retro gaming.
Check it out here:
OpenPandora.org - Pandora The OMAP3 Powered Handheld Linux Console