8-inch screen sounds awesome. More screen real-estate means bigger body, which means a bigger battery and potentially more mass to dissipate heat into (both allowing higher clocks?). Though, I worry about the portability of it; it would be bigger and heavier.
The Playstation Portal is not exactly a portable machine. The bezels will have to be kept thin for a more compact handheld.
That said, I am not much of a handheld user, but still a point worth bringing attention to.
Regarding the screen being an LCD display doesn't make it a deal breaker for me. A sharper screen is already very nice. A color accurate one makes it even better. An OLED display would be ideal.