Yeah I was dubious about the switch to LCD, sounds like a strictly cost cutting measure. I thought I'd wait and see, in case maybe Sony was using the LCD tech in their newer phones, but that doesn't appear to be the case with that pic.
Yeah the Vita has been disappointing. Its why I'm hesitant to find out what Sony has planned to handicap the PS4. Seems like even when they do things well, they find some way to screw it up. With the Vita is the proprietary memory cards, price, and doing their own mobile OS instead of just leveraging Android.
I expect sales will pick up some now that its $200 (and the cheaper but still overpriced memory cards), but expect the earlier model (are they going to keep producing the OLED one?) to be coveted for the display. I saw something that indicated that it might be due to some defects in the OLED panels as it seems they exhibit some burn in problems.
In many ways its a shame Sony put in custom game focused components as it makes it harder for them to just put in a newer SoC and be able to offer backwards compatibility, while being able to offer a fresh game focused tablet every year or two to keep it fresh, while also reaping the benefits of being able to put Android on it.
Incidentally, its a bit of a shame that Google didn't use the huge bezel width on the new Nexus 7 to put some game controls. Even if it was just a special Play version or something and cost extra, it would have carved out a nice niche.