I definately know they could. The PSP is just as powerful as, if not more powerful than, the PS2, so it's more than possible for them to do so. With the lower resolution of a PSP in comparison to a standard TV (about half the vertical resolution), it wouldn't be hard to get most of the data on one 1.8GB UMD. And if not, it's probably extremely easy to make a game on two UMDs.