yeah u can play with ppl who have a ds if they are less then a room away. the wifi doesnt connect u to ppl all over just ur friends who have a ds and are sitting right next to you.
both the DS and PSP have wifi, i've worked on games for both systems.
nintendo is super gay about it though, everything is designed for 10 year olds. You can't search for friends or anything on there unless you exchange "friend codes" in person, and no text chat is allowed.
plus the DS sucks unless you have super small hands - i can't play more than 10 minutes of mario kart ds without my hands cramping up. good thing i don't really like to play games anyway. but i'd reccomend a PSP if you're choosing.
wow what do people have against the ds, its way cheaper then psp, is more progressing, and has more games and better games... the only good game for psp is gta liberty city stories