Bah! It varies by emu and person.
ie: Sometimes some games and emus look best un-stretched, while others look fine, and still others don't lose proportion; sometimes they just look sharpest on the oroiginal res (naturally).
FWIW, emus look fine-to-great on the PSP; some are less attravtive due to the black bars, but you generally don't notice and.. so what if theres black bars on either side -- the actual picture might sitll be larger than others. (Since when did size count?)
Now, some games and some platforms show it more than others...
But consider..
Many platforms were 320x200; the PSP is 480x272, which is nearly 1.5 times.. ie; 1.5 on the horizontal, and nearly that on the vertical. So most machines stretch fine _Without a problem_.
Its your tighter systems that vary the resolution a lot, or use slim displays. ie: It looks harsher on your 256x256 arcade Pacman, but its fine for Atari 2600 sort of thing.
So it is up to the individual, and their pickiness, and the systems they choose to emulate. The Atari ST looks great on there, since it was 320x200.. people barely notice anything funky.
(Anyone who complains needs a slap; notice the GP2x and all GP32s are 240 tall, when most systems want 200; the GP32 has always needed vertical letterbox or stretching, and its the otp requested feature, right?)
The GP32 BLU is probably the sharpest so far, but if oyu want a big screen, the PSP is 'it'. If the gp2x is same as the BLU+ it'll look great, but its not as big.
But size isn't everything.
As always, its APPLES TO ORANGES people
jeff