Update #3: Mariko has updated the Generator emulator to Generator v0.1 today, and changes include the FPS now drawn on-screen however it is still quite slow and without sound.
Update #2: Kamisama has now released MD PSP v0.2 with changes including increased speed and ROM selection, however, the sound still isn't working yet.
Update: Another open-source SEGA Genesis/MegaDrive emulator has been ported to the PSP and released, namely Generator v0.0. In comparison to MD PSP (directly below), this Genesis/MegaDrive to PSP conversion currently doesn't include sound support nor a frameskip function.
Today Kamisama has released MD PSP v0.1, the world's first SEGA MegaDrive/Genesis Emulator for the PSP console! Based on Genesis Plus source code, this initial release has both sound (not working) and zip support and runs quite well for a first release. Be sure to rename all your ROMs to .SMD files as the emulator currently doesn't accept .BIN extension files. Overall, cool stuff!