So, you just used the UMD Passport feature to purchase a digital version of Metal Gear Solid: Peace Walker or you own a digital copy of Prinny 2: Dawn of Operation Panties, Dood! and you want to play it on your new PlayStation Vita. The first thing you have to do is install the game on Vita either by downloading it from the PlayStation Store or transferring it to the handheld via a PS3.
After installing the PSP game, you can run it on Vita. Sony added a few new features like LiveArea and optional bilinear filtering to sharpen images. Users can also change settings for the right analog stick, change the color of the virtual PSP, and select to use either the front or rear camera. Yes, games that require a camera like Invizimals are compatible too.
PSP save data can also be transferred to PlayStation Vita. However, you cannot insert a memory stick into the device. Users will have to use a content management program for PC or PS3 to transfer save files from one handheld to the next. Sony plans on releasing this application at an unspecified date.