That is not entirely correct.
It basically works just as it did on the PSP with some games on UMD and some on the PSN. Except DD (digital distribution) is now required (instead of requested) for any NGP game. The only real important thing to remember is that PSN games must be DD'd.
Well I'm just hoping that they don't make like 20 must have games....only NVG...so as I can loose them or they get stole and I have to but them all over again....or the "NGP Go" comes out 4 years later and is all DLC and we are in the same "I wish that game was on PSN" debacle that we are suffering now....I'm sorry there are still at least 20 psp games that need to hit PSN that I would buy and continue to play....I mean I am playing Resident Evil Director's Cut right now.....that is Older than any PSP UMD game......and even if NGP has it's own Resident Evil which you know it will....I will still play my Resident Evil's from the past and all other PS1 games on my NGP....for that matter on my hand held device...from what I know when I have my Sony Ericsson Xperia Play (PS Phone) and my NGP as well....I will be able to play my PS1 games on the Xperia as well as my NGP....
And the Xperia is a PSP Go with a phone in it basically and other Android apps or what not