I've been using MAME on PSP for a while, and honestly a lot of the higher end arcade games just don't work on the PSP, it's either the machine not being powerful enough or the emulator itself just not playing them. Some games it refuses to play altogether and some have major slowdown no matter what you do.
MAME on PSP is basically for 70's and 80's arcade games (which is good for me), I think the most advanced game I found working on it was Turtles in Time, and even then it suffers from a slight slowdown.
The best arcade emulators that work fine on PSP are CPS1, CPS2, NEOGEO (if that counts as arcade to you), and a small handful of games on FinalAlphaBurn.
