As you all know by now, SCEE has announced a new 40GB "entry level" PS3 for Europe. However, as this version doesn't include the required chip for PS2 games to be compatible, PS2 games cannot be played on the 40GB PS3. Sony does plan to release firmware updates that will make certain PS2 titles compatible, of course, but without that chip, it will likely be a slow and incomplete process.
As Sony said about the subject, this decision "reflects both the reduced emphasis placed on this feature amongst later purchasers of PS3, as well as the availability of a more extensive line-up of PS3 specific titles (a total of 65 titles across all genres by Christmas)." Sony president Kaz Hirai has said on more than one occasion that their focus is on the games, and everything else is secondary. SCEE spokesman Nick Sharples echoed this philosophy in talking to GamesIndustry.biz-
"We have made clear on many occasions that our priority is on developing innovative new features and services for PS3 and not on backwards compatibility. The 40GB model no longer contains any elements of the PS2 chip set which powered backwards compatibility in previous models, and is therefore only compatible with PS one titles," he said. "For those who consider backwards compatibility important, the 60GB Starter Pack with extra SIXAXIS controller, two first party titles and extensive backwards compatibility remains available until stocks run out. With a 100 Euro price reduction from 10th October, this model is a real bargain."
But hey, there is a bright side to the backwards compatibility that some people might be missing: even though the 40GB PS3 won't be able to play PS2 games (again, at the start), it will be able to play PS1 titles . That's right, it can successfully emulate most all PS1 games, so if you have a large first-generation library, have no fear!