The capacitors I've specified are the same as the ones on the N64 (height of them will depend, I could buy new ones but I was just planning on using the existing ones, which aren't any higher than the chip + heatsink)
I had planned to put most of them on the opposite side to the memory, but on reflection it might be a bad idea as far as heat is concerned.
For portable purposes, I could incorporate the shape of the portable in to the PCB, including a protection and recharge circuit for the batteries, as well as a built in controller, memory card port and space for the screen to go in the middle, and a mini-USB port for plugging in an adapter for players 2, 3 and 4. In mass production it could be quite cheap. I could get the board pre-populated with all the caps, resistors, etc, then it would just be a case of the buyer removing their chips and soldering them in place.
Another possibility that I'm actually looking into at the moment is dedicated graphics. The DAC converts signals so they can use composite video (as you know). There could be a possibility for using digital screens for better picture, lower power and reduced size. I'm looking at the PSP screen at the moment. If I'm quite honest, I could do with some pinouts for the N64 (PAL) so I can check some of this stuff out on a more serious note. Potentially, you could have an N64 the same size of as PSP with a PSP screen, PSP thumbstick perhaps too, maybe even PSP battery if the power consumption is low enough.