The Final Circiut Plan!
You can replace the 7805 with a LM1086 to get 3.3V instead of 5V. R1 and R2 are 1kΩ to 10kΩ. See 7805/LM1086 datasheet for C1 and C2 values. See cristal datasheet for C3 and C4 values (22pF should do the job). Input is from PSP TV out, Output is to TV, Connector is to PS2 controller. You may need another resistor for the LEDs depending on what LEDs you choose.