Which version of the Open Firmware do you have installed?
In the last three releases, you can press (I think) Select on the XMB menu, and then you can choose your output device for the USB connection.
Default is set to the Memory stick, you have to change that to UMD drive. When you then connect it to your computer it will show up as a drive. And you just have to drag the .iso file from that thing to your hard disk... afterwards just drag the .iso back to the memory stick in the 'ISO' folder.
I can't get this method to work when booted into Mac OSX, so you have to use Windows for this.
Hope this makes sense, I can't check my PSP because I was in the middle of the last battle in Metal Gear Acid 2!
PS.
When you have a UMD ripped to .iso, you can use apps to convert that to .cso, which will compress the filesize some.
Edit: Oops! I'm at work and only just skimmed the thread, didn't see that someone already said all this. I guess I wanted to help you so I'd get a tag that would say something like "UMD dumper", so I could start a thread about how that would relate to this traumatic memory I have of my 16th birthday, when my brother gave me a stack of CD-R's as present.
That really offended me as I didn't copy anything except porn. And that stuff isn't safe to keep on CD-R's anyway!
Edit #2: That makes me think, why doesn't anyone believe that porn piracy is bannable? Nobody thinks of someone as a porn pirate.. so why do we accept it, because we're all guilty?