I've heard a lot of "news" reports over this, and it seems recently that there is an official stance of denial over the original reports that using non-issue armor was punishible.
Not that it matters, it seems the U. S. Armed forces are now starting to turn a blind eye to the whole matter...
Yes, there's AC Zero out for PS2, and a companion game for the PSP: AC X.
Don't know much about Ace Combat Zero, but Ace Combat X for PSP is supposed to center around the "Balkan" wars from the pre-history of Ace Combat 5.