Trojan.PSPBrick
1UP just reported on the first known trojan targeting the Sony PSP.
Symantec’s Security Response center lists Trojan.PSPBrick as a low threat because PSP users have to deliberately download the trojan for it to do its thing. Nonetheless if they do, PSPBrick deletes system files, rendering the PSP a non-booting hunk-a-gunk (hence the catchy name, get it?).
PSPers beware: Make sure you know the source and full story behind a mod (whether you’re downgrading or upgrading) before you download it. Nuff said.
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BillDay.com 
are there any way of removing the virus from the psps system
Symantec provides removal instructions here.
Unfortunately, they also note that they don’t have any instructions for restoring a compromised PSP to its original state after trojan removal.
Er. Actually, I used the pspbrick ‘trojan’ to downgrade my PSP firmware,
from 2.00 to 1.50, and it worked admirably. You just have to follow the
instructions appropriately and carefully to avoid NOT ‘bricking’ the unit.
(I have since re-upgraded it to 2.60, also without incident, after getting
tired of tinkering with buggy homebrew applications..hehe.)