They've got 1GB inbuilt into the Vita 2000.
What I gathered from E3 (as well as a lot of people looking at various twitter tags like #NoVitaNoBuy, #PSVitaDirect etc.) was that Sony is marketing the Vita more towards Remote Play and PlayStation Now, both of which require an internet connection if you're not home. Layden goes on about PS Now as a main feature of the Vita, when tablets, phones and even TVs can access the exact same thing. The problem with this is that it makes the Vita seem like a $300 accessory instead of a portable games console. Talking about PS Now and Remote Play more than the actual games drive this point home.
Furthermore, the games that Layden mentions are not incredibly strong titles compared to the unknown, unannounced games that the PS4 had. Tales of Hearts R was already out, Child of Light is a port, Minecraft is a port that we already know about, and Telltale Games don't have a very good performance on the Vita - bad quality and they come out a lot later. The Wolf Among Us which isn't even out yet on the Vita. Games like Gravity Rush 2, Freedom Wars and Danganropa 2 would have been a lot better to talk about.
I don't disagree that the Vita is getting a lot of games - SCEJ definitely supports their Vita. But it really seems that SCEA didn't care at all about the Vita. Sure, they may support it, but if it's there, I can't see it due to their horrible marketing. They spent a bunch of time on a TV show, and offhandedly mentioned a few games that are coming out. None of which had any gameplay (mind you, this isn't including the cross-platform games announced earlier in the show).
"AAAs" definitely work on the PSVita. Uncharted, Killzone Mercenary, Need for Speed Most Wanted, WipEout, LBP are all great non-ports that were made on the Vita and they all work great on the small screen.
Sony needs to take a leaf out of Nintendo's book and develop a great first party game that will sell systems. Look at what Mario Kart's done to the Wii U, and Super Smash Bros is just gonna do the same thing.