The new 80GB PS3 does have a larger hard drive, but it's also lacking something very important for gamers who have large PS1 and PS2 libraries: the graphics synthesizer chip. The chip, included in the 60GB PS3, allows for about 98 or 99% backwards compatibility, which is just plain amazing by any estimation.
Unfortunately, the 80GB PS3 doesn't have the chip, which means the system approaches backwards compatibility in the same way the Xbox 360 does: via software emulation. Obviously, this means not as many games will work right off the bat, before Sony has time to add games to the list. But how big of a difference is there? Well, it'll depend on who you talk to, but here's one example of an in-depth testing:
Curmudgeon Gamer has tested out his library, and the results are relatively clear- as it turns out, the 128 PS1 games tested have "exactly the same compatibility issues" on the 60GB and 80GB PS3. 126 of the 128 will work fine with some very minor errors on both models of the PS3, but this changes drastically when testing a library of 90 PS2 games. The 60GB PS3 plays 84 of those titles "just fine" and 89 work with "minor inconvenient issues." But only 50 of these same games work "just fine" on the 80GB PS3, which translates to around 57%.
As expected, the 80GB PS3 simply doesn't work as well for backwards compatibility, but it doesn't appear to be nearly as restrictive as the Xbox 360 when it first started in regards to original Xbox games. We still like that chip in the 60GB PS3, though, plain and simple.