Can I play PS1 or PS2 games, DVDs and CDs on a Playstaion 3?
A 60GB PlayStation 3 is able to play CD, DVD, Super Audio CD (SACD) and Blu-ray discs. It also features a combination of hardware and software emulators that allow backwards compatibility to a wide range of PSone titles and some PlayStation 2 titles.
PLAYSTATION 3 (40GB, 80GB and 160GB) are not compatible with PlayStation 2 titles and supports only a few of the PSone games.
Sources: The Official Playstation Website.