A handheld with the graphical and multimedia capabilities of the PSP, and the battery life of the Nintendo DS would be awesome, but truth be told, I would still use my DS, since it has an awesome battery life, and I actually kinda like those 16-bit games.
Well, atleast games that have similar graphics to NES and Genesis games.
And they haven't probably released it because Nintendo and Sony do game consoles.
Microsoft does game console and Windows operating system.
All of the companies have 2 projects, Microsoft is just busy with Windows, because it's actually the most popular out of all of these companies' products.