I've got a PSP question: If I buy a PSP right now (a new one), can I hack/mod it so I can play downloaded ISO's?
No. The older the better, the firmware on newer ones prevents iso play. Best bet is to buy an older 1000 or 2000 (if you check if the firmware is 5.03 or lower) so it can be hacked.
Yeah that and newer firmware is required to play certain games. These games come with an firmware update on their disks. For example a game might say "firmare 3.03 is required to play this game". Then again I sold my psp 3 years ago so my info might be outdated.
From what I remember, the only factor now is the firmware the PSP has, regardless of 1/2/3000. The lower the firmware, the better. Although you really should try to get a 1000. It's much easier to hack. @usernameladiesman217 - Once the PSP is hacked, you update the Custom Firmware (which is continuously updated) to play newer PSP games.
I'd suggest a PSP 2000 model. Just try to find an older used one as the most recent 2000 model batches have an unhackable chip much like the 3000s and higher. Also be sure to do all the research you can on them before hacking them and installing Custom Firmware and all. Homebrew runs great on the 2000s so I highly suggest taking the time to hunt one down and learning how to properly hack them.