Yes, the new PSP Go is all digital and won't support UMD and yet, Sony has said all along that current PSP owners with UMD libraries won't have to worry, as there will be a transfer process – of some kind – place.
Well, it's still coming, but it won't be ready for the October 1 launch. According to Kotaku , despite Sony's drive to get a system in place in time for the PSP Go's arrival, the conversion program is hung up "due to legal and technical reasons." They continue to evaluate the program, though, and they're still working on hashing out the details so current PSP owners won't be left in the dark concerning their inventory of UMD if they pick up the PSP Go. Said Sony's Brian Keltner:
"We are looking into programs for owners who have previously purchased UMD titles and want to exchange them for digital versions. It's something we are still hammering out the details. As soon as we have solid plans in place we will make an announcement."
We've heard whispers about a plan that would include kiosks in retail locations around the world, where everyone could turn their UMD games into digital files that would work on the sleek new portable. Of course, this is only of concern to those who have supported the PSP thus far; if you've never owned one and are considering purchasing the PSP Go, this doesn't affect you at all. But hey, for those who wish to upgrade, this is a definite issue and we'll keep an eye on it for you.