They should have made smaller games instead, which they did eventually. Heck I used tutorials to cut the video files out of games like Ridge Racer to get them to just 100MB or so. But it was also part of a 'classic era Sony electronics' stupid plan to sell movies and crap on their new DVD version of minidisk.
Well the biggest system selling software of PSP in 2005 was GTA Liberty City Stories. Game had size of 1.2Gb. If you wanted somewhat PS2 caliber games during early PSP era cards were non option. I mean early DS games were on at max 128Mb cards.