I've heard this before, but just to recap:
You can buy a $400 PS3 that plays PS3 games and a $130 PS2 that plays PS2 games, for a total of $530. Both systems work natively in their designed mode, no emulation, guaranteed to play every PS2/PS3 game.
Or:
You can buy a PS3 that can play most PS2 games for $600.
Sony should strictly produce the cheaper PS3s, make a higher priced model with 120GB HD and 4 USB ports (honestly, the price between the HDs is like $20, the USB ports probably cost $10, if you charge $100 extra for this, you make $70 more profit), and then continue to produce PS2 consoles.