It's one of those things where it's either going to flop on its arse or possibly be a game changer. It's an interesting departure for SCE, as they are not making the hardware, simply providing the environment, tools, network infrastructure, and presumably lots of games (they have a massive back catalogue of PS1 games to start with).
I assume that the strategy comes from the realisation that although many people now play games, most only want simple $1-3 downloads in small chunks, not necessarily what they have always dealt in, so you let them run normal Android games. However, at the same time, others do want larger and deeper experiences, and due to how Android works, quite different to iPhone, there are a multitude of devices from different manufacturers with differing performance and differing features. So, they provide a single set of development tools (possibly even a maybe a ready made game engine) and a single development environment that will run on any phone that (I suppose it's SCE that will do this, not SE) is certified to run the Playstation Suite. Then, it's not just phones is it, I'd expect them to licence PS Suite to any device that complies with its minimum standards from other phones, tablets, TVs, BD players, etc. etc. If people then want top of the range, then they have the option of NGP and PS3 which will both run everything this phone will. So as long as it's a PS Suite game, and you download it from PSN, then you can run that content on any PS Suite enabled device including your PS3. A single stable game development environment could look very attractive to developers, especially if it also allows them to easily down-port their NGP and PS3 games to Android systems without too much effort.
It's an interesting approach that as I said could end up as a total disaster outside of their own Sony engineered devices. If they can get other electronics manufacturers onboard though, it could take off. SCE doesn't really give a shit about SE in this, even though they are using them as a launch platform. SCE want to sell software, and lots of it.