Some homebrew or indie-style PSP games are tiny, e.g., Cave Story port (~10 MB).
The obsession with is not about being cheap on storage; it is about efficiency. A 4GB memory card filled with 50 small, brilliant games (Puzzle Quest, Lumines, Patapon, Metal Slug) is infinitely more fun than a 32GB card with three massive, repetitive open-world games. psp games iso low mb