Most PS3s aren't backwards compatable, you have to find a PS3 from the release date era- i.e the 20GB or 60GB (as seen in Ldubs handy chart). They removed it because the original price on PS3s was way too high for most consumers and they were looking for ways to sell the unit cheaper. I heard the PS1/PS2 games dont convert very well on the PS3. All PS3s will upconvert as a DVD player

I just bought the 120GB PS3 to replace my third broken Xbox. I luv it