Having Linux as a handheld is freaky. The South Korean company GamePark Holdings made this dream come true. The GP2X is designed for hombrew and professional developers as well, and commonly uses any available emulators, as S-NES, MegaDrive, AMIGA, NeoGeo, etc. It is the successor of the GP32.
It is very homebrew friendly, and the SDKs are freely available. The development is usually done with GCC and SDL, so it's also very easy to create cross-platform games. There also exist an Allegro version for the GP2X.
Actually this sounds so cool, except for one thing: they won't release their modifications of GPL code, as the kernel 2.4 sources they use.