My dream portable would look just like the PSP Go. Four years of modern advancements would surely see it get a touch screen, more internal memory, a slightly faster CPU than the 333Mhz one that was in it, and a cellular data connection. Probably. And I'd take all that in the same slim casing.
The Xperia Play is truly portable and has a slim casing, 1 Ghz processor, touch screen, physical buttons, cellular data & voice connections... It's the only gaming device I use on the go and also is my primary phone. I got a 3rd party 3300mAh replacement battery for it and it now has all-day battery life
At home, I also sometimes play on the XPlay and use the ipad a lot. However, I rarely dust off the 3DS and haven't picked up a Vita yet, despite all the PS+ free games. So it seems that for me as well, dedicated handhelds have lost some of their appeal. There was a time when I loved dedicated handhelds and bought a GB, Lynx, TurboExpress and Nomad at launch. I also really liked the PSP, which was a huge step up graphically from all the previous handhelds. The Vita is another step up, but it doesn't have the same effect and appeal anymore - for anyone who has seen what the ipad 3 & 4 can do graphically.
For portable gaming on the go, I'd just like a hybrid device like the current Xperia Play. Only more advanced (HD screen, Tegra 4 SoC), with more dev support, more internal RAM, better analogue controls etc. There's been some vague rumours about an Xperia Play 2, but nothing reliable.