According to GamesIndustry.biz, Sony has announced that their PlayStation Room project for the PSP has been canceled. PlayStation Room was set to be a project somewhat like Home currently on the PS3.
The notice that the project was being canceled appeared in a Japanese statement that beta testing would end as well as development of Room. Sony has released no specific reason but it may have to do with beta feedback received on the project.
The service was designed to allow users to create their own rooms, 3D avatars, share images, write blogs and chat with friends. Much like home, the service was intended to be free but provide premium content for a price.