Does PS3 play all PS2 games? If not... which? Does it play Guitar Hero I, II and III? How about PS1 games?

http://www.gamingw.net/forums/index.php?topic=2182.0

40gb isn't backwards compatible at all, for the record, which is why it's $100 cheaper. None of them are 100% backwards compatible but 60gb and 80gb have the best compatibility. There's a link that'll allow you to find out if your games are backwards compatible.

Woah, really?  I wasn't planning on getting a PS3 any time in the near future, but I seriously thought it had backwards compatibility from the get go.

Maybe Sony doesn't want to work on emulating each game individually? Maybe Sony just wants to create a general emulator and be done with it.

My point was that they could, you know, let users who have the 40Gb model download the emulator...
Sony will probably end up doing the whole "download old games" thing that Microsoft has started doing at some point though, and PS2's aren't overly expensive, so I don't really care about backwards compatibility in the PS3.
The only reason why I cared with the 360 was that the Xbox had a horrible controller and someone forgot to fit the god damned CMOS battery, meaning it couldn't remember the time or date if unplugged

You already can download SOME old games (Crash 3pack, spyro 3pack, etc) but they cost $5.

I think it's perfect that way it is now.

As long as people are EDUCATED about the 40gb being incompatible, then it's fine. Not everyone wants to play old games on a PS3 (I have a ps3 and still use my ps2 for old games.) And for them, $100 off is a bonus.

With 92% compatibility on the other versions, I don't think anything needs to be changed, and it's well worth the extra $100 in the end if you plan on just using the one console.

Backwards compatibility basically gets worse the more recent the incarnation of the PS3; the launch model had the best compatibility (aside from the most obscure games everything worked, I recall FF12 messing up on FMVs, but they fixed that quickly).

The PS3 only has usb slots for input, which means you can't play GH1 or 2. I theorize you can use the GH3 guitar to play the older games, but I haven't tried it yet.
Also since it's usb only, your memory cards won't work. You'll have to buy the official usb-memorycard adapter and you can then transfer your saves onto the HDD (the adapter ran me about $20, which isn't that bad as it's what I was paying for the acutal cards at retail).

But yeah, my PSgame collection is a pretty decent range of notable games, and none of them have given me any trouble. You can also check the acutal Sony website to see what games will cause problems IIRC.

The PS3 can also play PS2 online games like FF11, you just need to go the the online store and grab a network emulator or whatever it is (Free) and install it to go online. If you have a large enough collection of PS2/1 games it's a solid purchase since 99% will work, plus you can consolidate all your saves in one place instead of having the cards all over the place.

The PS3 only has usb slots for input, which means you can't play GH1 or 2. I theorize you can use the GH3 guitar to play the older games, but I haven't tried it yet.
Also since it's usb only, your memory cards won't work. You'll have to buy the official usb-memorycard adapter and you can then transfer your saves onto the HDD (teh adapter ran me about $20, which isn't that bad as it's what I was paying for the acutal cards at retail.

You can transfer them back off, too. I've been doing this a LOT.

I've yet to have trouble running any PS2 or PSone games on my PS3.

ACTUALLY

The "software emulation" Playstation 3s actually have a PS2 graphics chip, installed in their hardware.  The CPU (Emotion Engine) is what was being emulated.  The newer, cheaper PS3s do not have the PS2 CPU or the PS2 graphics chip.  The original PS3s had both the PS2 graphics chip and the PS2 CPU, which is why it has "perfect" backwards compatibility (sans peripherals).

I think it's interesting that the backwards compatibility was coined as software emulation, when really, it is only partial emulation.  Since there is no PS2 graphics chip in the cheaper PS3s, they will probably never have backwards compatibility.