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The memory card has to be supported by the PSP, first of all, and the CSO Games have to be saved in the ISO Folder of your Memory Stick root. You might have to make this folder if you don't already have it.
When you reformat a memory stick it creates a trash folder which stores all the data incase you need to use it again. Put your memory stick in your psp then connect your psp via usb to a computer, in the computer view of the momory stick make sure you have the 'view hidden folders' option checked, then delete all folders & files on the stick. Remove the psp from the computer & reformat it again you should find 8gb available again
Connect your psp on your computer and after go in the file
MY COMPUTER and right click where your psp icon aprears amd there will be many options. To format your memory stick just click on FORMAT. If it doesn`t work you can just go in your psp menu and go to system settings and theere if an option called format memory stick. It will automatically fix your memory stick and after formatting it your memory stick will be completely empty and it should work.