Agreed, a 120bg PS3 is silly at this point here in the US. People complain about the price of the PS3 more than anything (which is silly because it's actually cheaper than an xbox360 which most people I know who complain about the price own an xbox360...)
The 40gb is doing well, and while foolish articles make claims that the PS3 makes people with a PS2 game collection retire it, that's false. I still have my PS2 connected as well as my PS3, XBOX, XBOX 360, etc. Backward compatibility is a convenience, not a matter of retiring something. Back in the day, people didn't throw out their NES system because the SNES came out. People who want to keep playing PS2 games will keep their PS2 connected, they're not forced to put it away to buy a PS3. So the cheaper cost of the PS3 without the backwards compatibility is a good thing.
Personally... I own the 80gb PS3. I was one of those consumers that didn't know the difference between the 60gb and 80gb other than what was stated on the box. Would I have changed my mind if I knew the 60gb was more compatible? Not likely. The larger HD and included game sold me on the 80gb, same reason I have an xbox360 elite. Not everyone cares about that stuff though, and until the games come out and bring Sony to the front of competition, any other versions of the PS3 would just be money thrown away.
One thing Sony could do is start including an HDMI cable and a headset much like the XBOX does. The cable would make people feel better about the costs I'm sure (especially on the retail level where such a cable is overpriced) and the headset would go to show that players can chat while they play. I wasn't even aware of such a function on the PS3 until I was talking to a friend about UT3. Features need to be utilized and expressed, the games will do the rest.
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