Hey. Just accidentally found this emulator and I must say it's THE BEST PSX emulator for android. Has many functions and settings and has really good compatibility. I can play "Resident Evil 3" and "Driver 2" on my HTC Wildfire with 535 MHz processor. Though it works just little slower, but playing is really cool and smooth.
Official website: http://www.fpsece.net/
Unlike the first PSX emulator for android, "psx4droid" this is much better. psx4droid was lagging like hell, was crashing lots and games wouldn't run, like "Resident Evil 3" was so laggy that it was impossible to play.

This app is not free, on Android market it's like 5$:
https://market.android.com/details?id=com.emulator.fpse&feature=search_result
But the paid version is freely available in Blapkmarket (really good website :
http://blapkmarket.com/en/mainpage/details/4df3855800230?search=fpse
For those who don't have an account (also I included the BIOS files, but they are not needed to play the game):
http://www.mediafire.com/?basrn5zayoky2a7

If the game still lags a little, try compressing it with the official FPSeCe tool: http://perso.numericable.fr/schtruck/PocketISO_32.zip
It can remove audio/video streams from places that cause most lag, compress the image in size so it works bettter. I was able to compress "Resident Evil 3" from 700mb to ~300mb and now I can play without any lag. Gonna post a video soon

Here is the video as promissed:

http://www.youtube.com/watch?v=1eYwAk2c6gg