After witnessing that P-body gets kicked in the crotch a lot (and that the behind-the-scene's commentators refer to him as a "he" ) i'm pretty sure he's a guy~ (a very feminine guy, but okay~)
and here's the BRO-HUG! WOOT!
Atlas and P-Body (c) Vavle
Don't be silly GLaDOS, you're just jealous~
IT SAYS "HIIIIIIS"