Some specs that will definitely be in the system:
Samsung s3c2440 400Mhz arm9 CPU
64MB SD-RAM 133Mhz
128kb Flash boot-Rom.
Soundchip DAC
SD-Card slot
USB port (charging via batteries may be possible)
Extension port, like the GP32 one (e.g. for chatboard)
Some things we're still discussing:
TFT type (3,5" original BLU screen - very cheap)
or a 4" 16:9 TFT screen
We also don't know yet if it will have WLAN, Bluetooth, IRDA...
It will DEFINITELY not have a harddisk or compact flash slot, and it won't have a touch screen.
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Of course, I will have to chip in a few suggestions (and I suppose everyone will want to get their $0.02 in on such an exciting concept). So, in order of decreasing feasability:
+A headphone jack, while not essential for devving, would still be appreciated.
+If it's going to run on AA cells, see if a CRV3 Li-Ion battery can't fit in the same space.
+Four face buttons would be great (especially with the specs in the target range for CPS2/NeoGeo emulation); six...would probably give it the proportions of an first-gen Lynx.
+TATE-ability (90-degree rotated functionality like the Wonderswan). Start & Select buttons adjacent the D-stick/pad/trackball/whatever would be perfect for a web browser or those vertical-aspect MAME titles.
+Is there a chance of, say, a console version with a TV-out, multiple USB inputs and networking features? I don't think I'm the only person who'd buy one (or two!)
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I think most people have an idea of a perfect emulation system going by current parts and specs...i think for it to be worthwhile and not just 'a little' more powerful then the GP32.
Processor 624mhz Intel Xscale
Memory at least 128mb to run say Neo-Geo and newer MAME games, no point getting stuck with a new system thats low on ram!
Soundchip on a handheld though not that important can be picked on price rather than spec, no need for a dolby digital compatible one!
SD-Card - spot on, cheap widespread.
Screen, i'd stay with a 3.5" BLU and not be tempted with 16:9 as if you look at the PSP, the games have to be stretched to take advantage anyway.
The Dell Axim X50v has a screen 3.7" that can handle 640x480 VGA that would be best to go for....after all the GP32 is a 2D emulation system, i think any new system HAS to go for full 3D and support higher resolutions otherwise whats the point?
Nearly forgot, a dedicated 3D GPU, a 624mhz processor however powerful it is still wont be able to handle some of the newer 3D games in software alone, pricewise probably the Nvidia Goforce 4500 is a good bet, 1 million/.polys sec as along as programmers can access the chip ala the N64 emulator on PC back in 1999 using the 3dfx chips...only problem here is licensing issues.
Button wise 6 face buttons with analogue stick ala NGP (not clicky though!) 2 shoulder buttons.
Apart from a mini usb port and headphone socket i dont see the need for wi-fi, bluetooth etc its a emualation handheld afterall....anyway hope a few ideas may help you...though price wise i think it may cost you more that you are willing....
Basically no matter how much you like or dislike the Gizmondo what we are doing is basically taking its parts strapping on a bigger screen...some of the stuff i put above would be nice but to be releastic then and to keep the price down then the Gizmondo specs are about right, though you could always try and hack that system and save all this bother!